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TIMES 


'••w/www.ft.coiii 


THURSDAY  APRIL  8 1999 


Rliicing  sdence 
Battle  against  fraud 
in  the  lab 
Page  12 


Why  a cut 
might  halp  the  euro 
Page  2. 


Coca^kHa'sfra 
No  place  left 
sell  a Coke? 
Page  22 


Reed  Elsevier 
II  looking  for 
leader 
Page  26 


WDRLD  NEWS 


CUnttm  says  China’s 
entry  into  WTO 
wpultf  benefit  US 


Ptesicf^  Sill  Clinton  said 
Ct^‘s  entry  Into  the  World 
Trade  Qs^sation  was  sttongly 
in  US  interests  as  expectations 
rase  in  Washln^n  that  negotia- 
tors would  reach  eai  accord  to 
pave  the  for  China's  WTO 
membership.  Page  18;  Theft  of 
N Bocfots,  Page  8;  China's  cur^ 
lehey  pfedge.  Page  4;  China 
Tetec^  spin,  Page  24 


fl|uM^  iHi^nessfflan  voer  to 

Boi^  Berezovsky  and  Alei^dar 

Smolensky,  two  of  Rush’s  most 
infiCientiaibu^ott^nen,  pledged 
to  retom  to  Moscow  to  fi^ 
accusations  of  corruption  ievetled 
against  them'.  Europe  Page  3 


} 


Rome  backs  Ubys  over  summit 
. Libya  coild  take  a first  step 
tmvai^  re-ente^ 
tional  commur%  next  week  as 
.Borne  presses  for  it  to  be  admit- 
ted toe  summit  on  free  trade 
and  security  in  Stuttgart 
Inteniationad,  Page  5 


Oevelom  nations  toee  km  gn 
Developing  oountii^  face  thdr 
siowest  rate'  of  ecorKxnic  growth 
for  t?  yearn  in  1999,  the  Wbrid 
' Bank  waned.  Page  ISq  Md  fafls 
to  18-year  low,  Page  5 


Tax  plan  praposai  aimed  at  UK 
The  Eurepean  Commission  is 
examintog  a cornprorrUaa  plan 
that  could  per^jade  the  UK  to  6ft 
its  threat  to  veto  the  bitroductton 
of  toi  EU-edde  witiihokfmg  tax  on 
irxxxne  from  savings  arxl  invest- 
, merits.  Europe,  P^ie  3 

Saftaefc  for  gun  kAby  in  Mbsourf 
The  US  ^ tobby  i^  a high- 
pro^  r^erendum  in  Mlssourt- 
that  wotid  have  iegafised  the 
carrying  of  concealed  we^xna. 
US,  Page  8 


BoJ's  $3Z8ba  V%  caafingfliim  jifan 
Tlw  Bank  of  J^»n  has  dbdoeed 
det^  of  a Y4p;000bn  (3328bn) 
contingent  plan  to  tai^ 
iffifontoeen  Year  2CIOO  cornpu^ 
pff*teh».~Aalii  PecWo,  Pejgs  4 t 


BUSINESS  NEWS 


Olivetti  warning 
for  Telecom  lta|ia 
shareholders 


'Olivetti  warned  Telecom  Italia 
shareholders  It  would  make  them 
“feel  Sony"  ff  they  (tedded  not  to 
ba(ti(  its€Ba4bn  ($65bn)  hostile 
bid  for  its  Italian  telecommunice- 
tions  rival.  Olivetti  said  if  the  bid 
failed  it  would  mount  a competi- 
tive assault  against  Telecom 
Italia.  Companies  and  marfceto, 
Page  19;  Lax,  Page  18 


Kvaamer,  the  Anglo-Norwegian 
engineering  and  shipbuilding 
company,  armounced  the  d^sar^ 
tore  of  a senior  executive,  paving 
the  ws^  for  a neorganlsatfon. 
Europe  companies,  Page  20 


Seagram  shares  rose  sharply  after 
the  Canadian  group,  the  workTe 
leading  music  dsbfbutor, 
anncxmced  a plan  to  join  forces 
with  Berteism^  to  sell  disos 
online.  US  and  Canadton  com* 
panfea,  Page  22 


Alcoa,  ttie  world's  biggest 
alumbiium  producer,  shook  off  a 
slide  in  ahiminium  prices  and  the 
effect  of  the  Biaztiian  crisis  to 
post  a surprise  incrsase  In  earn- 
ings. US  companies.  Page  22 


Btittrii  Teleeoiiiiiiiiileafioas  has 
added  to  Ms  praaoncb  In  tiie 
Asia-Padftc  region  by  pa^ng 
£240m  (S38Sn4  for  a ^ per  cent 
stake  in  SmarTone,  Hong  Kong's 
third  latest  mobfle  opentor. 
CompanleD  and  marikets.  Page 
1^  Observer,  Page.17 


The  SfovtotgDvmmnt  plans  to 
sell  its  36  per  cant  stake  In 
GlobtBl,  the  country's  leacfing 
mobile  teie(Aane  operator,- which 
coukl  dlow  .Franca  Telecorn  to 
win  nrttjori^  control  European 
oompwiisa,  ftoge  20 


IIB^  tile  Swiss  bank,  re-afl&med 
that  frtans  are  inter  w^  to  sell 
hundreds  of  properties'^'  Swit- 
zertand.  tn  a move  that  could 
raise  up  to  ^iSxi  (S2br^  Intor' 
national  oowpantoei  Paaa  22 


AUJANCE  PUTS  ‘KEY  QUESTIONS’  TO  MILOSEVIC  • SERB  COMMANDERS  NAMED  AS  POTENTIAL  WAR  CRIMINALS 


Nato  hardens  stance  on  Kosovo 


By  Onr  Intenuttonal  Staff 


Kato  yesterday  spelled  out  in  the 
clearest  tenos  yet  the  condttioiis 
for  ending  Its  air  campaign 
against  Yugoslavia,  reinfordng 
its  rafectton  of  Presideat  Slobo- 
dan Idosevic’s  unilateral  cease- 
fire dedaraticm. 

Hie  Nato  allies  rammed  home 
their  message  with  further  air 
strikes  and  the  naming  of  nine 
Serb  commanders  in  Kosovo  as 
potential  war  criminals. 

Ofltete]  Serbian  j«iM  the 
third  corps  of  the  Yugoslav  army 
had  hadted  its  opeiatkms  against 
the  rebel  Kosovo  Liberation 
Army  as  of  Tnmday  evening,  ftd- 
lowing  the  ceasefire.  But  Kato 
said  Ur  Milosevic  would  have  to 
answer  five  “key  questions" 
before  Nato  would  cease  Its 
a^oDS.. 

Tbe  if  he  was 

prepared: 

• for  verlfiahle  cessation  of  all 
pfWTihat  activities  IritlfrigB 

• to  withdraw  military,  police 
and  paramilitary  forces  from 
Kosovo. 

• to  agree  to  the  deployment  of 
^ intematkmal  security  force. 

• to  permit  the  onoonditional 
return  of  all  refugees  and 
miimpeded  ««**»«««  for  humanitar- 
ian 

• to  join  in  pnWng  in  place  a 
political  ftamewcurk  for  Kosovo 
on  the  baric  of  the  UamliAwmat 
aectmls. 

"We  very  mndr  hope  that  the 
next  time  Ur  Milosevk  gets  back 
in  touch  he;  win  answer  these 
questions,"  •hunie  the 
Iteto  RpokAcman  mt  added 

that  Nato  saw  Ur  Milosevic's 


AlUs'oiaih  of  a tragedy;  Rouges  apeneies  ere  wpiried  about  whet  ha»  hmpsBed  to  SOyODO  letugisa  mads  to  Isew  this  bwdar  camp  ly  Macectonian  police  AP 


ofllsr  00  Tuesday  night  as  *‘pe^ 
haps  a in  the  armour, 
a gradual  coming  to  terms  with 
reality". 

A l^to  official  said  the  alliance 
had  snceessfuTly  attacked 
armoured  vehlde  columns  in 
Kosovo,  Its  first  direct  strike 
against  unite  primarily  involved 
in  carrying  out  the  mass  expul- 
sicsr  of  ethnic  Albanians. 

But  there  was  growing  concern 
yesterday  about  the  fate  of  hun- 
dreds of  thousands  d Albanians 


who  had  left  tiietr  homes  in  Kos^ 
ovo,  after  the  Yugoslav  autimri- 
ties  dosed  the  main  border  cross- 
ings to  Mgffwriiwto  aTirt  Albania. 

And  refugee  agencies  ware  also 
worried  about  what  had  hap? 
pened  to  30,000  refugees  who 
were  forced  by  the  MTagartoi^iaw 
government  to  leave  a border 
camp. 

Meanwhile,  CNN  television 
reported  from  Pristina,  the  capi- 
tal of  Kosovo,  that  Nato  air 
strikes  on  Tues^y  night  bad  hit 


fuel  storage  dumps  and  severely 
damaged  the  dty  centre. 

It  reported  "ooUateral  damage 
to  civilian  areas"  and  quoted 
local  officials  as  saying  10  bodies 
had  been  ptffied  from  the  rubble. 
The  hardening  of  the  Nato  line 
ccrinidded  with  a marked  increase 
in  diplomatic  activity  between 
the  etopg,  and  attempts  by  non- 
Nato  par^  to  mediate  between 
the  allianffP  «md  Rp]pn»d«* 

Spyros  Kyprianou.  the  acting 
president  of  Cyprus,  called  off  a 


mtarinn  to  Belgrade  to  secure  the 
release  of  three  captured  US  ser- 
vicemen because  Nato  would  not 
give  clearance  for  his  airc^  to 
fly  from  Athens.  He  is  due  to  tri' 
again  toda>>. 

Reporting  bg  Neil  Buckley  in 
Brussels.  Guy  Dinmore  in 
Belgrade,  Steven  Fidter  in 
Washington 


Kosovo  crisis,  Page  2;  Nate's 
unhappy  birthilay.  Page  16;  Tide 
may  be  liiiidng,  Dbseiver,  Page  17 


.tnMZ.nfBciir  lonin.tipMDiOD 
Hugo  VanaSMi^ 

dent,- tested  hte  abangth:  against 
Ccmgressby<ternandteg.eco- 
rmraic  and  state  nsfomi  . 

bon  be  retirenim.  Latin  Amarioe, 

f-  Pages.. 


Seetefly  CouRcil  atots  baq  tafls 
Witb  scant  sigrB  of  vinl^,  the  15- 
-member  UN  Security  CouncE 
beite*i  discusstons  on  tte  <tead- 
locketi  poliq^  on  disarmament 
.arid  teuictions  ki  Iraq. 
'HetitetionaL'Pege  8 


IhlMwt  sataffite  rriay  anger  Cbins 
Taiwan's  plans  for  a an  $6Qm 
earth-obaaryatlon  sateOite  with 
pofonbai  appficatlons  are 

sat  to  raise  (^>lomatlc  issues 
wifo'Chtnia.  Asia--ftK(nc,  Page  4 


Dalch  frit  by  gloomy  foraeast 
The.CXrtCh  official  forecast  for 
eoononric  growth  this  year  was 
cut  to  2 per  cent,  dgnaWr^ 
potential  protrierns  for  the  gov- 
ernment ktirieedhg  Its  bucfoetsry 
ttegets.  Europe,  Page  3 


Oflohto  blow  fw  tobacco  indi^ 
..TheOS-hriteccp  IndusUy  suffered 
a dbubie.bfow.  ^ a CaDfonria 
iiid^'riilsd  that  Philip  .Morris. 

; would,  have  to  pay  $2^  of  a 
- SSiiBrri  jury 'award,  and  the  Jus- 
. dee  Deparbhent  signadad  it 
. .;fitended  to  press  ahead.wfth  a 
federal  lawstA  U^  Page  8 


Doite  tta' OB 'poww 

group,  vowed  to  .figlA  for  coirirol 
d &Kteea;Chfle,  the  country's 
tergtet  qbcbfciV  generator. 

US  cpRipariiea,  n^e  22 

Tbi  IndBibW  Bank  ol  Japm  hae 

urrweOed  a thiee-paar  etiteegy  to 
defend  Its  sftaro  of  Japanis  lucra- 
tive investment  banl^  rnartcet 
from  weetem  brolmis,  Aoie 
PaoNto  .cpmpaniea^  Page  24 
oompanlea,Paga  24  ' 


Redaiii  toe  US  cosmetics  groig). 
corifirrned  it  was  corisidering 
poaalsfbllDvrirqrate^orspecii- 
latlori  about  a 83bn-pfus  tedte-.  . 
over.  Companfes  and  marfcefis, 
Page  19;  tso^  Page  18 


Tbe  RmbUU  Than  and  The  WaM 

Street  Journal  whidi  compete  . 
wound  toe  world  ki  buteness 
journalism,  are  to  Join  forces  for 
toe  first  time  to  help  launch  a 
businen  newspaper  to  Busaia. 
Europeaii  ootnpinlea,  Page20 


OwtoB  10  tectarioal  pnbtems  at 
F1SE  Internalfoiial  some  teUn  and 
grapHcs  nuM  sot  bt  gristed  iDT 

tbitwflBoii. 


Wo^Eq^Maitets 


Tto  bte^  tmxteand  (Wa  fipRi  inoie 
nan  sb.iatiaB8i|  imdwlista  glance 


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US,  EU  set  to  end  trade  fight  on  banana  imports 


8y  S«ner  hkanriw  ta  Ms 


An  VTMi  to  flW'tnhg  and  Ainuigfug 
trade  ffiqmte  between  the  IIS  and 
the  Buropean  Uflioo  seeiied  in 
di^lsst  zjl^  after  tbe  EU  said 
It  would  abl^  by  a 'W«id  Trade 
Orgazrisation  ruling  on  banana 
tnpoita. 

However,  Brussels  signalled  ft 
might  squMBl  against  gome  of  the 

WTO  dedstens. 

Tbe  WTO  ruled  this  week  toat 
the  dama^  soCfored  by  US  com- 
pantes  because  <4  toe  EtTs  prtilef- 
ential  treatment  for  bananaa 
from  farmer  European  colonies  in 
the  Caribbean  and  elsewhere  was 
slgnificatiay  lower  than  the  US 
kail  initially  estimated. 


It  hmited  the  scope  of  Washing- 
ton's^zetakatory  measures  arid 
IKSfocuteri  'a  decision  on  whether 
it  was  legal  for  the  US  to  impose 
sanctions  on  the  EU. 

In  a stetemenr  issued  in  New 
Ddfal.  wbm  be  is  on  a visit,  the 
actii^  EU  trade  commissioner. 
Sir  Leon  Brittan.  said  that  Bros- 
sela.  reserved  the  ri^t  to  appted 
but  would  "naturally  abide  by 
the  rules  applicable  in  the  case  of 
such  dedstons". 

The  rating  meant  there  was 
sow  "a  basis  to  settle  the  dis- 
pute" with  the  US,  said  Simon 
Sraser,  an  official  in  Sir  Leon's 
office. 

"We  have  said  these  measures 
wree  excessive,"  be  added,  and 


toe  US  would  have  to  scale  them 
down. 

However,  the  EU  suffere3~a  6e^ 
back  in  a related  case  when  a 
WTO  arbifxation  pan^  supported 
a oompleSnt  trom  Ecuador  that 
the  EU's  banaTW  import  regime, 
favouring  former  British  and 
French  colonies  in  Asia,  the 
Caribbean  and  the  Pacific  (ACP), 
was  incompatible  with  WTO 
rules.  Changes  introduced  by 
Brussels  in  January  bad  not 
eUmxnated  toe  distortions. 

EU  officials  said  yesterday  they 
reserved  the  right  to  appeal 
against  the  WTO  Judgment  on 
the  regime  - tbou^  there  is  no  - 
appeal  against  the  sanctions. 

In  the  case  broo^  by  the  US, 


toe  WTO  ruled  that  the  damage 
caused  Jo  American  companies 
by  the  SU’s  banana  Import 
regime  amonsted  to  S191.4m  a 
year,  well  under  an  earlier  US 
estfanate  of  gsaom. 

A WTO  official  said  the  S 191 4m 
figure  was  final  and  not  subject 
to  appeal.  The  US  earlier  claimed 
the  arbltratioii  award  as  a major 
victory.  However,  it  was  Too 
early  for  either  side  to  claim  vic- 
tory," said  Ur  Fraser. 

The  US  recently  started  setting 
up  its  retaliatory  measures  in  toe 
form  of  tarUte  of  up  to  200  per 
cent  on  a number  of  EU  products 
sold  in  the  US. 

jjx  Washingtoo.  Charlene  Bar- 
sbdSky,  US  trade  representative. 


said:  "The  EU  has  now  yei 
another  opportunits’  to  demon- 
strate that  it  is  wiliiug  to  respec-t 
the  rules  of  world  trade  aod 
thereby  bolster  oonfidenL'd  in  the 
WTO  as  a forum  for  redres.<«in^' 
trade  barriers." 

Caribbean  officials  e.vpresseU 
disappointmeot  at  the  outcome  of 
toe  WTO  investigation,  although 
many  had  expected  It. 

Frimce  also  said  it  accepted  the 
WTO's  dedsioDS,  but  the  minis- 
try of  international  trade  would 
request  a transition  period  to 
limit  the  economic  effects  on 
ACP  banana  esporting  countries. 


Ezpoftem  contused,  Page  6 
Editorial  comnenl  Page  17 


Fed  rethinks  policy 
on  economic  growth 


By  Bwiid  Batar  to  WmtilngteB 


Ihe  remarkable  US  economic 
performance  of  recent  years  is 
not  a fluke,  acenffing  to  ABoe 
Bivl^  the  Federal  Reserve's 
vlc&toatr. 

- Tiie  us  centiai  bank's  number 
two  said  this  sttoation.  might 
havS  lasting  impUcations  for  eco- 
nmiric  and  monetary  policy.' 

Ms  BivUn  said  that  policy- 
makecs  were  looking  a^in  at  the 
relationship  between  rapid 
growth,  low  nnemployinent,  and 
prides. 

Econmnists  have  generally 
beUeved  that  tight  labour  mar- 
kets oblige  employers  to.  pay 
Wgbwr  wages  to  attract  woxk^ 

But  Us  Bivto  said  there  was 
evidaioe  toat  lowunemiAoymsiit 
in  recent  years . had  held 
doim  Inflaticm  by  firitisg 
ntegto  use  tesouroes  more  efieo- 
lively. 

*<Ec(m<BEdste  have  had  In  their 
bead  the  Idtet  that  labour 
marifets  would  lead  to  inflation 
sod  low  ptodnetivtty.  We  have 
seal  nettotf."  she  said. 

xDay  he  that  undo:  the  pres- 
ent dinciiiastsaices  of  fisce  ^tfoal 
competztloB  the  effect  <tf  ti^ 
labour  mark^'  is  exactly  the 
oipporite^,.  • 

, Empbynts  had  instead  st^gted 
up'  maitegerial  innovation  and 
invested  more  to  tFatojhg.uDskSl- 


led  workers,  she  added. 

This  might  have  created  the 
unusually  benign  conditions  of 
stitmg  productivity  growth,  wage 
ina  eases  ai^  low  inflation. 

Us  BivliD's.remaziss  are  a clue 
to  the  erolving  views  of  Fed  poli- 
cy-makers  on  whether  the  central 
bank  tooold  raise  interest  rates. 

Tba  central  bank  has  refrain^ 
ftom  tightening  policy  to  recent 
montos,  despite  strong  growth, 
because  inflatioa  has  remained 
low. 

Some  have  speculated  that  this 
inaction  reflects  uncertainty 
about  what  has 
been  hai9ening  in  the  ecraomy. 

But  Us  RivUn  said  that  far 
from  'making  the  F^'s  job 
harder,  the  potentially  revolu- 
ffiungaa  under  Way  in  the 
economy  actually  made  policy- 
mating  teffilST. 

'Tf  we  made  the  riroztg  move  - 
allowing  more  labour  market 
Hgbtncas  thas  u desirable  ■=■  you 
wouldn't  get  an  explosion.  You'd 
get  tlte  beginnings  of  an  uptick  in 
inflariM  and  you'd  have  time  to 
react* 

■ The.US  ecoDoniy  has  grown  at 
an  rate  of  ahnost  fbur  per 
cent  for  toe'  past  three,  years, 
priaitfoig  -the  unemployment  rate 
do^tO'Ai'  per  cent,  a 29-yaar 
low.  • ■ . 


BraUt  with  tCBdltjoo,  Page  6 


CONTENTS 


WMfd  NMn:  Ilfo  fonerites 
IntemaSoRBl.S,  AstePa^  . 
:Tjs^e,UK 


European  Haws:  2>3l 


HaiMgeaanffreclinQtog]i;  12r14 


Gonment  & Anal^  16,17 


Companies  & Rnaoce:  19-26 
Europe  20,  The  Amelias  22 , 
Pacific  24.  tntemadonal  25, 

Oic'26; 

tepftal  Markets  28  ^ 

WtBitf  Stock  Markets:  34-40 


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Vintage  1945 

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WORLD’a^NEWS 


FINANCIAL  TIMES  THURSDAY  APRIL  81^ 


KOSOVO  CRISIS 


FATE  OF  ETHNIC  ALBANIANS  EU  BACI«  AWAY  FROM  FIXED  QUOTAS  FOR  TAKING  REFUGEES  ■ MACEDONIA  SPEEDS  UP  INFUjX .M^gjGOVA'^  PEACE, jjjglSffgP 


Skopje 

clears 

border 

crush 


Refugee  plight  worse  as  Serbs  bar  crps§ip^ 


By  Sleian  Wagstyl  m Tirana, 
Emma  Tucker  in  Luxembourg 
and  agencies 


By  Robert  Wright  In  Skepfe 


The  Macedonian  government 
cleared  30.000  refugees  from 
the  now  notorious  border 
crossisg  at  Blace  early  yes- 
terday, forcing  some  of  them 
to  go  to  neighbouring 
Albania. 

At  the  same  time,  Yugo- 
slavia amrarently  dosed  its 
border  crossings  into  neigh- 
bouring Albania  and  Mac- 
edonia and  told  refugees  to 


The  Kosovo  refugee  crisis 
yesterday  took  a dramatic 
turn  for  the  worse  when  the 
Yugoslav  authorities  closed 
their  border  crossings 
to  Macedonia  and  Albania, 
raising  concern  about  the 
fate  of  the  ethnic  Albanians 
who  had  been  queueing  at 
the  frontier. 

The  news  came  as  Ger- 
many lost  its  battle  to  per- 
suade European  Union  coun- 
tries to  commit  themselves 
to  taking  fixed  quotas  of  ref- 
ugees as  differences  surfaced 
between  member  states  over 
bow  to  respond  to  the  inQus 


of  displaced  people  into 
Albania  and  Macedonia. 

At  an  emergency  meetii^ 
of  EU  interior  ministers  in 
Luxembourg,  FYance,  Italy. 
Britain,  Spain  and  Finland 
backed  away  from  German- 
led  plans  to  share  formally 
the  burden  of  refugees  in 
response  to  rqipeals  from  the 
UNHCR,  saying  priority 
should  be  ^ven  to  proriding 
protection  as  extensively  as 
possible  within  the  region. 

fn  Bonn.  Rudolf  Scharp- 
ing.  Germany's  defence  min- 
ister. said  he  had  informa- 
tion indicating  that 
Yugoslav  forces  had  begun 
foreix^  some  Kosovar  Alba- 
nians away  from  the  border 
and  back  into  the  province 


to  use  as  human  shields 
^inst  Nato  air  attacks. 

In  a statement,  the  EU 
ministers  said:  "Long-term 
admission  of  Kosovars  to 
countries  outside  the 
region. . . would  consolidate 
their  displacement  from 
their  homes.  That  would 
seod  the  %Tong  signal  to  the 
Serbian  regime,  on  which  all 
forms  of  pressure  must  be 
stepped  up  to  put  a stop  to 
displacement  of  people  from 
Kosovo  and  make  it  possible 
for  them  to  return  in  safety.” 

However,  the  ministers 
agreed  to  assist  "as 
required”  Albania's  commit- 
ment to  take  100.000  Koso- 
vars currently  in  Macedonia. 
"This  would  reduce  for  the 


time  being  the  need  to  create 
settlement  possibilities  out- 
side the  re^on,”  the  state- 
ment said. 

Otto  Schily.  the  German 
interior  minister,  who 
chaired  the  meeting,  said 
every  country  bad  given  a 
“dear  undertaking”  to  sup- 
port calls  from  the  UNHCR 
to  take  in  refugees  but  the 
decision  as  to  how  many 
needed  to  be  moved  would 
be  left  to  the  intemationai 
body. 

“We  thought  it  was  best  if 
people  could  stay  in  the 
r^OD  where  they  spe^  the 
iangiiap:-  and  where  aid  can 
reach  them  most  quickly 
and  effectively.''  said  Mr 
Schily. 


Jack  Straw,  the  British 
home  secretary,  said  'it  was 
important  that  “nothing  is 
done  within  the  £17  institu- 
tions which  in  any  way 
plays  into  the  hands  of 
pfugt^lav  President  Slobo- 
dan] Milosevic  and  the  Serb 
terrorists”. 

”We  should  not  act  in  any 
way  as  to  appear  to  provide 
Miltsevic  with  the  comfort 
of  removing  very  hi^  num- 
bers of  refugees  from  the 
region,  which  is  what  he 
wants."  he  said. 

However,  be  acknowl- 
edged that  it  mi^t  in  the 
future  be  necessary  to  move 
people  from  the  area  on  a 
temporary  basis.  Such  a 
move  would  be  based  on  the 


voluntary  choice  of  refugees 
and  proposals  from  the 
UNHCR. 

Germany,  aggrieved  that  It 
bore  the  brin^  of  the  refugee' 
crisis  provoked  by  the  war 
in  Bosnia,  has  been.'pushing 
for  a formal  system  of  bur- 
den-sharing by  EU  member 
states  for  some  time.  How- 
ever, its  efforts  have 'mainly 
fallen  on  d«d  ears.  G^masy 
took  in  more  than  350,000 
people  displaced  as  a conse- 
quence of  the  Bosnian  con- 
flict - more  than  all  the 
other  EU'  countries ' put 
together. 

Separately,  the  European 
Commission  announced 
€350m  ($269m)  in  humanitar- 
ian aid,  nearly  half  of  whidt 


will  go  to  Albania  'and  Mim. 
.e^nia,  wheve 
refuged  are  no*  sftitated. 
The  Commiisloh  .said  the 
funds  should  help  these 
countries  pay  for  • social 
costs,  registration,  electric- 
ity, water,  sanitation' 
transport. 

The  Euiop^  ..Coaneil  ' cm 
Reftigees  and  Exile  . (EQ^; 
said  yesterday  kfr 
evic’s  policy  of  etfanld  cleans- 
ing  would  not  he  reversed'!^ 
leaving  pec^  In'  the  regipa. 

"IT  moving  the  rafogedi-to 
other  countries  helps  thm, 
then  that  is  wha^  we'shtrakl" 
do,”  said  Peer  Banecke',  gen- 
eral secretary  of-ECRE.  Be. 
said  it  was  not  ^ to  use  the 
refuses  as  a p^ticsl.tdoL 


return  to  their  homes  in  Kos- 
ovo. The  dedsion  appeared 
to  be  related  to  Yugoslavia's 
unilateral  ceasefire  for  the 
orthodox  Easter. 

The  closure  was  reported 
to  have  caused  concern 
among  those  already  inside 
Macedonia  waiting  for  fam- 
ily members  further  back  in 
the  vast,  slow-moving  queue. 
Progress  on  entry  into  Mac- 
edonia had  slowed  almost  to 
a halt  in  recent  days  because 
Afocedonia,  which  claims  to 
have  130,000  Kosovo  Alba- 
nian refugees,  had  said  it 
could  take  no  more  without 
firm  pledges  from  other 
countries  to  take  in  the  refu- 
gees. 

After  the  cleaxlng  of  30,000 
from  the  field  next  to  the 
Blace  border  post,  thousands 
of  people  were  put  on  more 
thw  100  buses  and  taken  to 
points  on  the  border  with 
Albania,  which  said  on  Tues- 
day that  it  was  better  able  to 
deal  with  refr^ees  than  Mac- 
edonia. The  Organisation  for 
Security  and  Co-operatioa  in 
Europe  said  at  least  14,000 
Kosovo  Albanian  refugees 
who  entered  south-eastern 


Riddle  over  Rugova’s  role  in 
agonised  search  for  a deal 


Followers  say  the  pacifist  leader  appeared  with  Milosevic  under 
duress,  report  Stefan  Wagstyl  and  Guy  Dinmore 


Ibrahim  Rugova,  the 
Kosovar  Albanian  leader 
who  appeared  last  week  at 
the  side  of  Slobodan  Milos- 
evic, die  Yu^^v  president, 
has  left  his  followers  floun- 
dering for  an  explanation  of 
his  apparent  co-operation 
with  their  oppressor. 

Among  refugees  in 
Albania,  the  only  possible 
answer  is  that  Mr  Rugova  Is 
acting  under  duress.  All 
reject  any  compromise  with 
Mr  Milosevic. 

Analysts  in  Belgrade 
bdieve  Mr  Milosevic  is  cal- 
culating that  having  seri- 
ously weakened  the  Kosovo 
Liberation  Army  (KLA)  over 
the  past  two  weeks  he  can 
now  tiy  to  cut  a deal  with 
Mr  Rugova.  The  deal  envis- 


Albania  overnight  came  . aged  by  Belgrade  would 


from  Blace.  Others  were 
taken  to  newly  formed  col- 
lection centres. 

Paula  Ghedini,  public 
information  officer  for  the 
United  Nations  High  Ckjm- 
mlssloner  for  Refugees 
CUNHCR).  said;  "We  are  very 
concerned  that  families  have 
been  separated.  People  don't 
want  to  go  to  these  places”  - 
such  as  Albanm. 

However.  Ms  Gbedlni  said 
the  UNHCR  was  idad  the 
field  by  the  border  crossing 
at  Blace  bad  been  cleared. 
The  field  bad  become  a sea 
of  mud,  with  insanitary  con- 
ditions. Ms  Ghedini  said  ref- 
ugees bad  wanted  to  leave 
the  field  and  had  queued 
calmly  to  leave. 

Other  accounts  su^ssted 
Macedonian  riot  police  had 
been  called  in  to  force  refu- 
gees on  to  the  buses.  The 
operation  appears  not  to 
have  been  co-ordinated  with 
intemationai  bodies  provid- 
ing relief.  However,  some 
people  spent  the  night  in  the 
open  at  the  collective  centres 
b^use  the  centres  had  not 
been  told  to  expect  the  new 
arrivals. 

Few  of  the  international 
oiganisations  are  clear  on 
what  is  happening  on  the 
Eosovo  side  of  the  Macedo- 
nian border.  There  were 
reports  that  people  who  had 
been  waiting  for  up  to  a 
week  to  cross  the  border 
could  be  seen  turning  their 
cars  and  heading  ba«^  under 
poUce  direction  for  towns 
such  as  Pristina,  the  Kosovo 
capital. 

Macedonia's  sometimes 
rou^  handling  of  the  huge 
refugee  flows  has  caused 
concern.  One  western  diplo- 
mat said'.  They  tmvent  cov- 
ered tbemseh'es  in  glory.” 

However,  the  government 
has  said  it  did  not  ha^'e 
enough  money  or  interna- 
tional help  to  do  things  dif- 
ferently. 


involve  a partition  of  Kosovo 
or  a form  of  autonomy  that 
would  leave  Serbia  in  de 
facto  control  of  the  province. 

Vdth  mounting  evidence  of 
Serb  atrocities  in  Eosovo, 
Kosovar  Albanians  are  say- 
ing they  cannot  return  to  a 
Serb-ruled  Kosovo.  For  most, 
independence  under  Nato 
protection  is  the  only  option. 
That  would  seem  to  rule  out 
any  plan  Hr  Rugova  may  or 
may  not  be  discussing  with 
Mr  Milosevic. 

While  most  refugees  had 
come  to  these  conclusions 
soon  after  Mr  Rugova 
appeared  on  Serbian  televi- 
sion with  Mr  Mikeevic,  the 
Serbian  leader’s  ceasefire 


offer  bas  broi^t  attention 
ba^  to  tbe  role  Mr  Rugova 
may  be  playing  in  Belgrade. 

“I  think  he's  not  in  a posi- 
tion to  speak  freely,”  said 
Ilaz  RamaiU,  Kosovo  ambas- 
sador to  Albania,  the  only 
country  which  recognises 
Kosovo’s  independence  (it 
did  so  in  1991).  Any  judg- 
ment on  Mr  Rugova's 
actions  must  wait  until  be  is 
seen  to  be  fine,  be  saj's. 

However,  Acinan  Marovci, 
an  sdde  to  Mr  Rugova  con- 
tacted by  telephone  in  Kos- 
ovo's capital  of  Pristina, 
where  they  are  effectively 
under  house  arrest,  said  his 
"president”  had  demanded 
that  Mr  Milosevic  withdraw 
his  forces  from  Kosovo  and 
allow  the  safe  return  of  refu- 
gees under  Nato  escort. 

The  aide  said  Mr  Rugova. 
who  had  decided  not  to  flee 
and  to  stay  in  Kosovo,  had 
asked  the  Serbian  authori- 
ties to  allow  him  to  visit  cer- 
tain western  countries  but 
no  approval  had  been  given 
so  far. 

A western  diplomat  who 
also  spoke  to  Mr  Marovci 
said  Mr  Rugova  was  being 
manipulated  by  the  Serb 
authorities  and  was  being 
used  as  a hostage.  He  is 
guarded  by  Serb  police, 
along  with  his  wife  and  two 
children. 

Mr  Ramajli  says  that, 
whether  or  not  he  is  acUng 
under  duress,  Mr  Rugova 
has  lost  his  power  by  oppos- 


ing "the  will  of  the  Albanian 
people”.  The  Kosovar  Alba- 
nians reject  any  call  for  a 
Nato  ceasefire  unless  Serb 
forces  vacate  Kosovo,  as 
Nato  itself  bas  demanded, 
says  Mr  RamaiU,  a lawyer. 

Jakup  Krasnici,  political 
director  of  the  KLA,  the 
guerrilla  force  fighting  the 
Serbs,  says  Mr  Rugova 
seems  to  'be  acting  out  of 
fear  or  under  Serb  pressure. 
However,  in  a remark  that 
betrays  the  animosity 
between  tbe  pacifist  Mr 
Rugova  and  the  KLA,  Mr 
Krasnici  says  that  if  Mr 
Rugova  has  co-operated  will- 
ingiy  "he  bas  committed  an 
act  of  treason  against  his 
nation”. 

Among  refugees,  the 
strong  support  for  tbe  KLA 
suggests  that  even  if  It  is 
confirmed  that  Mr  Rugova 
has  acted  under  duress,  he 
has  lost  even  more  of  his 
waning  political  authority. 
For  most  of  the  1990s.  his 
peaceful  campaigns  for  Kos- 
ovo autooomy  won  respect 
at  home  and  abroad.  He  was 
backed  by  a "government” 
led  by  BiUar  Bukoshi.  prime 
minister  living  in  Germany, 
where  he  oiganised  success- 
fti]  fund-raising  for  Eosovo 
in  the  Albanian  diaspora. 

Many  Albanian  i&)sovars, 
parficularly  wraltbier  urban 
people,  dislike  the  KLA's  bel- 
ligerence. its  allied  links 
with  criminal  gangs  and  its 
Marxist  rhetoric.  But  in  tbe 


Ibrahiin  Rugova 


Bom  Dec  1944 
Istog,  Koam 
Father  osoiled  three 
weete  laar  W 'Hki's 
partisans  as  'an  enemy 
of  the  Yugoslav  Slate' 
GraduBted  University 
Pristina  in  1971 
SbKSed  at  the  Sorixinne 
In  Parts  1975f77 
ISBStoliawOig 
atmishment  of  Kosow's 
amonomy  elecled 
presicient  of  the 
Democratic  League., 
of  Kosovo  (LfliQ 
1992  elecM  presUerti  of 
Kosovo  in  unend^ 
underground.  elecBons  • 
1995  Dayton  Peace 
Tiaaty  dashes  Rugova's 
hopes  of  setf-govemment 
for  Kosovo 


Turkey  aims 
to  aid  Moslem 
brethren 


By  Leyla  Boiiltan  in  Aiikara 


last  year,  the  increasing 
aggression  of  the  Serb  forces 
bas  created  a wave  of  sup- 
port for  the  KLA. 

At  the  Rambouillet  peace 
talks  this  Februar>',  Mr 
Rugova  was  sidelined  as 
western  governments  paid 
more  attention  to  the  KLA 
del^iation  led  by  a Hashim 
Thaqi.  a 29-year-old  former 
guerrilla  leader.  The  three 
Kosovar  fections  agreed  cm 
an  interim  government  with 
Mr  Thaqi  as  prime  minister 
and  other  posts  shared 
equally  between  the  KLA. 
Mr  Rugova’s  Democratic 
League  of  Kosovo  (LDK)  and 
the  United  Democratic  Move- 
ment fLBDi. 

Since  the  Rambouillet 
accord  'was  not  implemented, 
the  relationship  of  the 
interim  government  to  tbe 
existing  Bukoshi  govern- 
ment was  not  resolved.  Mr 


Ramajli  says  they  exist  side 
by  side.  But  he  insists  all 
Kosovars  are  united  in 
resisting  the  Serbs. 

In  practice,  the  conflict 
has  radicalised  Kosovar 
opinion  to  tbe  KLA's  great 
benefit  Even  as  It  is  sustain- 
ing heavy  casualties  in  the 
fighting,  it  is  gmnlng  sup- 
port, including  from  the  ref- 
ugees. Valdet  Bozdhara,  a 17- 
year-old  Kosovar  refu^  in 
Kukes  in  northern  Albania, 
is  one  of  dozens  of  men  who 
In  interviews  pledged  to 
figfat  "We  have  no  choice. 
We  cannot  live  under  Serb 
rule." 

One  Kosovo  Albanian  com- 
mentator, who  asked  sot  to 
be  named  said  Mr  Rugova 
would  commit  political  sui- 
cide if  he  accepted  a deal 
with  Mr  Milosevic  that  did 
not  involve  the  presence  of 
foreign  peacekee^g  troops. 


Albania  fears 
influx  could 
shatter  calm 


Albania:  even  more  meiitlis  to  feed 


Life  expectancy 
atbUiQeatsl 


AiMtBtnacy 

neaw 


Red  BOP 

percaptiaCOOO) 


Doctors* 
per  lOCMnO  people 


By  Stefen  Wagstyl 


FINjLNCULTMfS 

PobhAed  by  llie  Fuuocul  rones  lEordpel 

GmbH.  NthdndRopUe  3.  UI3IK  Fnu* 

flirt  dm  Modi.  Gnnuy  Teiepbooe 

Ifl  136  SSt.  Fu  +449  W $46  4481.  Repie- 

sattd  a Fiankfnn  bv  Cdm  A.  Kenoud 


as  CexlufisfQbrcr  and  in  London 


Daxid  C.M.  BdL  Cbainiuii.  and  Mas 
Miller.  Deputy  Clunuii  The  SmiclKridB 
of  the  FnUKul  Tones  lEutppe)  GmbH  b 
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IT  Richard 


AI74  ^363.  Respoosible  Editor 
Lanbm,  do  Um  Fraanrial  Tima  Lodud. 
Nmnbei  One  Sombnik  Biidne,  London 
SEI  9HL. 

FVaNCX: 

fthfaUne  Pneeior  P.  Mons^n.  42  Roe 
U Boete.  75008  PARIS.  Td^booe  (01  > 
537«  81*4.  Fu  lOlj  5316  8253.  ftime- 
SA.  Nord  Edair.  15CI  Roe  de  Cane. 
F-.WI0D  Rouboia  Cedes  1.  EAior  Riidiud 
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^nUIR  No  (fTSKD. 

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5-550  06.  fjnkSpag. 

C Titr  FnuoenJ  Times  Lmiiled  1999. 
E^kir  Ridutd  LamberL  eto  The  Fiaaneial 
Tones  I Twneri.  Ninnba  One  Somfanaift 
Bndse.  Le^an  9HL. 

R 


On  the  dusty  outskirts  of 
Tirana  young  men  in  leather 
jackets  slouch  about  in  the 
street.  They  barely  move  a 
muscle  when  the  air  Is  cut 
by  the  sound  of  machine-gun 
shots  coming  from  a few 
blocks  away.  It  is.  after  all,  a 
familiar  sound  in  Europe's 
most  lawless  country. 

The  men  in  this  shabby 
district  are  nK»tiy  northern- 
ers W'ho  came  from  the 
mountains  to  the  relative 
prosperity  of  the  capital 
after  the  collapse  of  commu- 
nism. But  few  found  jobs 
and  Tirana  residents  blame 
them  for  much  of  the  city’s 
violent  crime.  They  call 
them  Chechens  after  the 
war-tom  Russian  province  of 
Chechnya 

If  Albania  finds  it  difficult 
to  cope  with  simple  move- 
ment of  migrant  workers,  it 
will  struggle  to  come  to 
terms  with  the  arrival  of  the 
refogees  who  have  fled  Kos- 
ovo in  the  last  two  weeks. 
By  late  yesterday,  there 
were  more  than  300.000,  or 
nearly  10  per  cent  of  the 
Albanian  population. 

International  aid  agencies 
praise  the  welcome  Albania 
has  given  the  refugees.  A 
common  culture  and  shared 
hatred  of  Slobodan  Milos- 
evic, tte  Yugoslav-  president, 
has  inspired  generosity 
among  native  Albanians.  Yrt 
there  are  fean  that  tins  calm 
cannot  last  in  a land  of 
chronic  economic  and  politi- 
cal instability. 

Knut  VoUebaek,  the  chair- 
man of  the  Organisation  far 
Security  and  Co-<g)eratlon  in 
Euit^,  warned  on  a 'visit  to 
Tirana  this  week  that  in 
both  Albania  and  nei^hboor- 
ing  Macedonia  tbe  economic 
situation  was  "difficult''  and 
the  political  position  "rather 


fragile”. 

“The  system  in  any  coun- 
try could  be  jeopardised"  by 
such  a large  inflow  of  refu- 
gees. he  said. 

The  government  of  Pandeli 
M^ko,  tbe  31-year-old  prime 
minister,  pins  its  hopes  on 
tbe  foreign  aid  that  has  been 
promised  by  the  World  Bank 
and  other  donors.  He  says 
Albania  must  help  tbe  eth- 
nic Albanian  refugees, 
including  those  rejected  by- 
Macedonia,  even  though  it 
cannot  afford  tbe  costs.  Sali 
Berisha,  the  volatile  opposi- 
tion leader  and  former  presi- 
dent whose  supporters  last 
year  staged  armed  riots,  bas 
pledged  to  avoid  taking 
advant^e  of  the  refugee  cri- 
sis. 

But  many  Albanians  have 
a sense  of  foreboding. 

Zef  Pred,  director  of  tbe 
Albanian  Centre  for  Eco- 
nomic Research,  an  Indepen- 
dent think  tank,  said: 
"Because  of  its  poverty,  this 
county-  was  already  in  seri- 
ous difficulty  before  tbe  cri- 
sis.” Mr  Pred  says  some 
business  people,  for  fear  of 
unrest,  are  already  reducing 
stock,  locking  away  vdtides 
and  equipment,  cutting 
imports  and  transferring 
money  abroad.  The  cui-rency 
bas  not  yet  been  seriously 
affected,  with  tbe  lek  tailing 
marginally  against  tbo  US 
dollar. 

To  some  extent,  the 
decline  in  normal  commerce 
is  being  offset  by  demand 
generated  by  the  refugees 
and  by  crisis-linked  spending 
by  aid  workers  and  other  for- 
eigxters.  But  these  flows  can- 
not compensate  for  tbe 
uncertainty  the  war  has 
brought.  As  Arben  Malai, 
ebairman  of  tbe  parhamen' 
tart'  economic  commissioa, 
said;  "E^-erything  we  have 
done  in  1997  and  19^  mil  be 


Total  hesKb 
expemBma* 
asa%offiDP} 


Halo  teleplione  fines** 
pw  tjxn  peivia 


12 


SoowtN 


agvHJtrfSWaovr  • law  ia9t 


As  the  site  of  a decisive 
Turkish  victory  over  the 
Serbs  600  years  ago,  Kosovo 
has  a unique  historical  and 
emotional  resommee  for  Tur- 
key today.  Angered  by  Serb 
oppression  of  Kosovar  Alba- 
nians - many  of  whom,  like 
the  Turks,  are  Moslems  - 
the  Nato  member  is  one  of 
the  most  enthusiastic  sup- 
porters of  air  strikes  against 
Serb  taigets  in  Yugoslavia. 

"The  Serbs  have  never  for- 
^en  us  and  they  consider 
everybody  who  is  a Moslem 
to  be  a Turk,”  says  Aitemur 
Killc,  a newspaper  columnist 
and  retired  diplomat  who 
supports  Turkey’s  ultra- 
nationalist  MHP  party. 

Sultan  Murad's  defeat  of 
Serb  Prince  Laxar  - 'whose 
picture  was  recently  carried 
by  Serb  demonstrators 
alongside  that  of  Slobodan 
Milosevic,  the  Yugoslav  pres- 
ident - snbjugat^  Serlria  to 
the  Ottoman  Empire  fbr 
much'  of  this  millennium. 
HlstoTical  ties  to  Moslems  in 
the  DOW  independent  Balkan 
states  give  Turkish  empathy 
for  victims  of  Serbian  "eth- 
nic cleansing”  a special 
edge.  Or,  as  Suna  On  gun,  an 
Ankara  housewife,  put  it: 
"Turkey  should  help  these 
people  more  because  they 
are  paying  the  bill  for  our 
past.” 

Turkish  fighter  aircraft 
are  taking  part  in  tbe  air 
strike,  while  the  Turkish 
equivalent  of  the  Red  Cross 
is  readying  accommodation 
for  20,000  refugees  at  a camp 
near  Turkey’s  border  with 
Bulgaria. 

The  feelings  are  recipro- 
cated by  many  of  the  Koso- 
'var  refugees  airea^  in  Tur- 
key. Elmaz  Hati.  a chemistry 
teacher  from  Pristina  who 
was  one  of  the  first  Kosovars 
to  be  airlifted  out  of  Macedo 
nia  to  the  main  Turkisb  ref- 
ugee camp  of  Gazi  Osman 
Pasha,  named  after  an  Otto- 
man war  hero,  said:  "The 
Moslem  connection  makes 
us  feel  close  to  Turitey  nnd 
we  are  grateful  to  her  for 
taking  us  in  until  we  can  go 
back  to  our  homes.  What  ts 
happening  in  Kosovo  is  a 
campaign  against  Moslems.” 
Emotion  aside,  the  conflict 
is  pregnant  with  strategic 
and  political  significance  for 
a country  that  is  not  only' 
home  to  Sm  ethnic  Alba- 
nians but  sees  tbe  Balkims 
as  Us  backyard. 

The  timing  of  Nato  efforts 
to  help  Kosovars  is  crucial 
in  two  respects.  Buleut  Ece- 
vit.  the  Turidsh  prune  minis- 
ter who  has  made  much  of 


his  country's  military  and 
humanitarian  support  for 
Kosovar  Albazilans,  figto  a 
general  election  in  10  day^ 
"The  people  of  Kosovo  are 
our  brokers.  Their  pain  is 
oar  pain.. .No  coun^  has 
done  as  much  as  Turkey  to 
help  the  people  of  the 
r^oo,’’  Mr  Ecevit  told  an 
election  rally  yesterday 
before  moving  on  to  visit  the 
refugee  cany). 

At  a time  of  tension  in  its 
relatioim  with  the  Eunpemi- 
Union,  Turkey  also  expects 
to  reap  some  .we^ra  recog- 
nition for  proving  to  be  one 
of  the  more  staunch  pillars 
cd  Mato  at  the  alliao^’s  SOtb 
anniversary  summit  in 
Washington  at  the  end  of 
this  month. 

At  present,  the  Nato  cam- 
paign looks  as  though  It  can 
only  boost  both  Mr  Ecevit's 
election  chances  and  Tur- 
key's international  standing. 
In  spite  of  screaming  head- 
lines from  oppositioa  news- 
papers. such  as  "History  wUI. 
Never  Foi^ve  Ecevit"  'ahd" 
"Ankara  has  a Heart  of 
Stone”,  accusations  that  the 
goverament  has  done  too 
Uttte  too  late  have  so  far  cut 
little  ice  with  tbe  public  at 
large. 

A protracted  war.  how- 
ever, could  be  fraught  wftii 
complications  for  Turkey. 
The  domestic  consensus 
behind  Nato  action  conld 
begin  to  mumble  if  the  num- 
bers of  refugees  arriving  in 
Turkey  were  to  get  out  of 
h.md  and  Turkish 
resulted  from  an  eventual 
decision  to  deploy  grou^ 
troops  in  Yugoslavia,  a move 
which  Turkey  says  it  would 
endorse. 

Awkward  questions  could 
also  multiply  over  Ankara’s 
logic  in  continuing  to  insist 
on  the  preservation  of  Yugo- 
slavia's current  borders.  Tur- 
key fears  that  supporting 
independence  for  Kosovars 
could  encourage  Kurdish 
separatism  within  its  own 
borders. 

Mr  Kilip,  who  writes  for 
the  conservative  Tbrkiye 
newspaper,  said  recent  sup- 
port expressed  by  SOleyman 
Demirei,  the  Turkish  presi- 
dent. for  both  Kosovars  and 
Yugoslavia's  territorial 
integrity  was  a contradiction 
in  terms. 

"Kosovo  is  surely  going  to 
be  independent  after  this  so 
we  should  stick  whb  Alba- 
nians all  the  wa>'  and  not  be 
wishy-washy  about  it."  he 
said. 

With  additional  reporting 
from  Funja  G&ler  at  Cazi 
Osman  Pasha  Refugee  Camp, 
in  ucstem  Turk^ 


put  at  risk  now.” 

Tbe  gains  of  the  past  year 
were  modest  by  the  stan- 
dards of  other  post-Commu- 
nist  countries.  Albania, 
Europe's  poorest  country, 
emerged  from  Stalinist  isola- 
tion uito  violent  chaos,  in 
which  men  broke  open  mili- 
tarv’  arsenals  and  stole  an 
estimated  im  guns.  In  1997, 
tbe  collapse  of  fraudulent 
pyramid  savings  schemes 
plunged  Albania  into  anar- 
chy. which  ended  only  when 
an  Italian-led  international 
force  of  7,000  troops  arrived 
to  restore  order. 

In  elertions  in  June  1997. 
voters  threw  out  the  ri^l-of- 
oentre  Democratic  party  gov- 
ernment of  Mr  Berisha, 
which  bad  been  deeply 
involved  in  promoting  pyra- 
mid savings,  and  opted  for  a 
socialist  coalition  under 
Fatos  Nano,  an  experienced 
former  communist  However, 
riots  broke  out  last  Septem- 
ber after  tbe  assassination  of 
a Azem  H^dari,  a leading 


supporter  of  Mr  Berisha.  Mr 
Nano  was  forced  to  resign 
and  was  replaced  by  tbe 
ynuthfui  Mr  Mqjko. 

Despite  the  political  tur- 
moil. tbe  economy  last  year 
grew  8 per  cent.  recovxTing 
from  a 7 per  cent  decline  in 
1997.  Money  flowed  in  from 
Albanians  overseas,  includ- 
ing 400.000  recent  emigrants, 
most  of  whom  live  in  Greece. 
The  inflow  hit  a record 
$42im  last  year,  prompting  a 
surge  in  house  builtUng. 

However,  tbe  country  can- 
not feed  itself.  Food  is  the 
biggest  component  in 
imports,  which  last  year 
exceeded  exports  by  8602m. 
The  workers'  remittances 
are  essential  to  financing 
this  deficit,  as  is  foreign  aid. 
Some  $270m  was  due  to 
arrive  in  the  flrst  year  of  a 
1998-2001  agreement  with  the 
International  Monetary 
Fund  and  other  donors. 

Albania  is  trying  to  pursue 
privatisation  and  other  mar- 
ket-oriented reforms  agreed 


with  the  IMF.  But  as  with  so 
many  other  chronic  prob- 
lems it  is  difficult.  Tbe  gov- 
emnieat's  writ  barely  runs 
outside  Tirana  and  even  in 
the  capital  the  police  aban- 
don some  districts  at  night 
to  criminal  gangs.  Smug- 
gling drugs,  arras  and  Illegal 
immigrants  to  western 
Europe  provide  lucrative 
work  for  organised  crime, 
some  involving  Kosovars. 

To  ease  tbe  acceptance  of 
tlw  refugees,  aid  camps  are 
being  spread  through 
Albania.  Refugees  will 
receive  food,  shelter,  health- 
care and  education  for  their 
children.  But  Albania  cannot 
give  them  work  or  little 
immediate  prospect  of  eco- 
nomic security.  Of  course,  if 
the  war  ends  with  the  refu- 
gees’ return  to  Kosovo,  the 
burden  on  Albania  will  be 
eased.  But  if  it  does  not,  the 
price  for  keeping  them  in 
Albania  could  run  very  high. 
And  not  just  in  terms  of 
money. 


Bfilent  Ecavfc  bees  a general  election  in  10  days 


Oronue 

k 

fe^VCl;U 


U ^ V ^ 


Sr.v' 


1-a-  ■. 


5c: 

5c,: 


5i“. 


■543  ■ 


' .f . 


y 


financial  TIMES 


'THURSDAY  APRILS  1999 


3 


• Businessmen 
pledge  to 
fight  claims 


EUROPE 


Primakov  determined  to  dilute  power  of  oligarchs 


I 


Few  believe  arrest  warrants  for  two  of 
Russia’s  most  powerful  businessmen  were 
prompted  sol^y  for  legal  reasons.' ' 

John  Thornhill  Andrew  Jack  report 


ByAndrawjackaBd 
Mm  fiioniMn  in  llosQon  ind 
Robert  Graham  in  Parts 

7^0  of  Russia’s  most 
influential  businessmen  yes* 
lerday  pledged  to  return  to 
Moscow  to  fight  accusations 
of  corruption  levelled 
against  them,  while  the  man 
who  issued  warrants  for 
their  arrest  fou^t  for  his 
own  survival  in  the  wake  of 
sexual  and  financial  alleea- 
ttons. 

Boris  Bereaovsky,  a Krem- 
lin power  broker  <nirrently 
in  France,  and  Alexander 
Smolensky,  the  powerful 
' head  of  SBS-Agro  bank,  who 
is  in  Austria,  both 
the  cases  brought  against 
them  in  the  last  few  days 
were  politically  motivated 
and  protested  their  inno- 
cence. 

In  Moscow.  Yuri  Skuratov, 
the.  general  prosecutor  who 
launched  the  investigations, 
said  efi6rts  ‘’conjured”  up  to 
force  him  out  of  office  were 
illegaL  and  put  his  fate  in 
the  hands  of  the  Federation 
Council,  the  Russian  upper 
house  of  parliaTngnf  which 
is  due  to  met  today. 

Mr  Berezovsky,  whom  Mr 
Skuratov  says  Is  under 
inquiry  in  relation  to  the 
activities  of  Andava,  a 
Swiss-based  company  wMch 
managed  foreign  exchange 
for  the  airline  Aeroflot, 
refused  yesterday  to  go  into 
the  details  of  the  case 
aga^  him. 

At  a hastily  convened 
press  conference,  in  the 
rooms  of  the  Hotel  Crillon  in 


Pdris,  flanked  by  body- 
guaitis.  he  said:  ”1  intend  to 
return  to  Moscow  next  week. 
I feel  obliged  to  go  heck  to 
show  there  is  a law  that 
works  in  Russia.” 

He  said  he  was  a victim  ctf 
a deliberate  attempt  by  the 
pneral  prosecutor  to  Incrim- 
inate him,  and  denied  he 
was  staying  in  France  to 
avoid  arrest.  France  anrf 
Ru^a  have  no  extradition 
tTMty.  have  nothing  to 
gain  from  being  seen  to  hide 
and  avoid  going  back  to  Rus- 
sia when  the  prosecutor  is 
behaving  Illegally^  he 
added. 

A spokesman  for  SBS-Agro 
said  that  the  accusations 
against  Mr  Smolensky, 
whom  he  said  was  recopeia- 
ting  from  fiu,  related  to  an 
incident  seven  years  ago 
connected  to  allegedly  illegal 
bank  loans  and  were  “com- 
pletely without  foundation”. 

Mr  Skuratov,  who  formally 
resigned  for  the  second  timg 
this  week,  made  a thinly 
veiled  attack  on  the  presi- 
deutial  adminisCFsttion  as  he 
defended  himiepif  {q  front  cd 
the  Du^  Ihe  lower  house 
of  parliament 

He  argued  that  a seowtly 
recorded  videotape  shown  on 
televidon  which  appeared  to 
show  him  cavorting  with 
two  yoimg  women  violated 
privacy  laws,  and  that 
efforts  to  have  him 
suspended  by  the  Moscow 
prosecutor’s  office  were  also' 
filial. 


Observer,  Page  17 


Two  questions  have 
resounded  in  Russia 
throughout  the  ages: 
who  is  to  blame?  and  what 
to'  do? 

But  in  recent  years,  a 
third  question  has  bees 
added:  who  ben^ts? 

As  Moscow  digested  the 
news  that  arrest  warrants 
had  been  issued  against  two 
of  the  country’a  most  power- 
fill  “oligandis”  - Boris  Bei^ 
zovsky  and  Alexander  Smo- 
lensky - that  last  question 
rang  out  again. 

Pew  were  prepared  to 
accept  the  moves  against  the 
two  tycoons,  who  have  been 
so  closely  associated  with 
President  Boris  Yeltsin's 
regime,  were  prompted 
solely  by  legal  consider- 
ations. Vladimir  Ryshkov, 
iMTliamentary  leader  of  the 
moderate  Our  Home  is  Rus- 
sia party,  said  the  whole 
judicial  process  in  Russia 
had  become  politicised  as  a 
result  of  the  current  scandal 
surrounding  Yuri  Skuztttov. 
the  country’s  top  law  officer, 
who  has  himself  been 
accused  of  moral  - if  not 
criminal  - wrongdoing. 

"Now  whenever,  there  is  a 
criminal  case,  initiated  by 
the  prosecutor  general,  the 
question  will  always  arise: 
who  benefits  from  the  politi- 
cal point  of  view?"  said  Mr 
Ryzhkov.  R is  an  indication 
of  the  political  flux  in 
Moscow  that  it  is  difficult  to 
discern  the  answer. 

On  the  fece  of  it,  Ye^^ny 
Primakov,  Russia’s  prime 
minister,  woi^  appear  to  be 
the  biggest  benefidaiy.  Not 
only  is  the  move  against  Mr 
Berezovsky  politically  popu- 


ECB ponders 
’ if  cut  would 
buck  up  euro 

Bank  d^ides  today  whether  single 
currency  Would  benefit  if  rates  came  cSown 


ByAJanBealfie 


The  retmtion  of  the  euro  to 
the  outcome  of  d^he^ons 
today  by.  the  Buropean. Cen- 
tral Bank  may  reve^  a curi- 
ous paiadmc. 

Analysts  have  for  some 
time  believed  that  the  weak 
eon>  be^  tme  of  thefec- 
tcns  rediming  the  ne^  and 
the  desire  of  the  ECB  to  cut 
interim  rates. 

a growing  feeling  in 
the  finanrfai  markets  is  that 
if  the  ECB  does  ciit,  arid 
ticidmiy.if  tt.is  accompanied 
by  a strong  bnpuession  that 
the  aim  is  to  kkkistart  eco- 
nomic growth,  the  m^ 
lisa. 

Economic  theory  says  that- 
falls  in  interest  rates  lower 
the  yield  on  assets,  making 
them  less  attractive  to  Inves- 
tors. Other  things  being 
eqiml,'this  tends  to  lead  to  a 
fall'  in  the  currency.  The 
higher  Inflation  whidi  may 
foDow  intei^  rate  cuts  also 
weidEens  currencies,  as  they 
need  to  fell  to  let  the  econ- 
oniy  regain  competitlvene^ 

But  in  a Iqw-ittflati^  enm- 
nminent  where  economic 
growth  Is  at  . a premium,  a 
cut-  in  sbort-tem  interest 
'rates  may.  posh  up  interest 
rate  expectations  over  the 
couple  of  years  by  rals- 
ing.hopes  of  fester  growth 
atywft  This  may  cause  the 
axrteocy  to  rise. 

gy<»h  afibcts  on  cmencl^ 
have  been  evideDt  in  th&  fVr 
ei^ exchange  markets  in 
.recent  months.  The  pound 
-bias  remained  stubbornly 
high  d^te  five  UK  toterttt 
xatd.'.cuts  in  the  p^t  six 
fqnntiig,  often  rallying  imme- 
diatety  after  the  annoui^ 
menc  or  daring  the  following 

day.  ■ ■ . 

. The  'Ckmadtas  dollar  and 
Sw^h  krona  have  alsa 
rlsw  .inunediately  after 

r^t  interest  rate  cuts; 
i»in>p  'ihou'S^'  both  movM 

were  lai^  by 

the  market.  . 

-32»  US  dollar  also  bene- 
fit^ ^ the  US  Federal 
Resell  steady^  the  ^ 
ket’s  serves  wth  interest 
rate  cuts  late  last  year. 

Tn  another  .envirtasxn^ 
a cnt  in  interest  rates 
have  caused  long  hoi^ 
yields  to  rise 
higher 

and-iack  of  credibility,  sa^ 

Nick  Parsons,  chief  cuneocy 
strate^  at  Paribas  in 
"don.  “But  at  the 
wtlfe^tobal  foflafioo, " 

^ea^fitatioM  of  relative 

®»wt6-rates.”  ^ ^ a 


conld  wen 'be  that  if  Ihe 
ECB  - cuts  rates,  ' the 
improved  prospects  for  a 
recov(^  m ont^  lata:  this 
year  'submit  the  cunmicy," 
says  Mh^el  Wallace,  cur- 
rancy  managm-  at  Stamferd 
and'  Poor's  MMS.  A cat 
wonld  help  , the  euro-zone 
economy  m^  away  Sum  a 
period  of  “sustained  stagna- 
tion", he  says. 

Others  think  .that  while 
intm<^  rate  cuts  can 
currencies.-  the.  euro-zone 
economy  Is  not  yi^  in  a posi- 
tion to  benefit. 

“There  are  two  sorts,  of 
rate  cuts.”  says  Bit  Judses. 
h^  cf  bonds  and  curren- 
dre.  at  NatWest  GFM  in  Lon- 
don. “One  is  the  sort  that 
have  helped  ffie  Swedish 
krona  and  the  Canadian  dol- 
lar recentiy,  wh^  the  cuts 
have  been  seen  as  support- 
ing growth  and  making 


‘Cut  would  help  - 
euro-rone  move 
away  from  period 
of  stagnation’ 


futnre  cots  less  hkely.'' 

But  Mr  Juekes  said  a cut 
by  the  ECB  would  be  nroze 
iiir«  recent  reductions  in 
interest  rat^  by  the  Czkh 
central  hank,  or  the.  slow 
grind  towards  zero  cf  Japa- 
ne^  ovenn0it  interest  rates 
over  the  past  year.  "In  this 
cas^  the  mai^  takes  the 
move  as  a sign  of  weakneffi 
and  as  erideoce  that  th^ 
are  more  -cots  to  come,”  he 
adds.  Mr  Jnckes  says  that 

even  if  the  ECB  does  cut.  the 

next  moim  is  as  fikbhF  to  be 
tqi  as  it  is -down. 

The  largest  imponderable 
is  whether  the  ECB  itself 
dgns  up  to  the  view  that 
lower  interest,  rates  could 
support  the  '^wro.  Although 
ECB  offlciais'have  played 
-down  the  signififaHtce  the 
currency's  weakness.  Com- 
ments this  weA'by-  ECT 
hoard  member  Jean-Claude 

•IWchet  siwstthey  wfll  be 

reluctant  to  let  it  feS  much 

more-  -•  . 

So  if  they  do  act  sbm  the 
view  that  an  4nter^  rate 
cut  will  supfiprt  the  cui> 

; leoqy,  this.couldJbe  a oitical 
factor'in  piw^aling  a, reduce 
riwi  The  outcome  of  today's 
meeting-could  give.an  hnp^. 
ta^  due  to  tbear  thinking. 

‘tf  . the  ECS  holds  mone:. 
tary  policy  - steady.” 
Michael  Wallace.  It  w; 
dmw  that  .this  leap  of  fetth 

was  too  mu^  fix*  tb^ 

Miiflriat  owtunent  17  - 

t--  


Tax  plan 
proposal 
aimed 
at  UK 


By  EmmaTui^  bi  feussets 
and  Csorge  Grabara  in  London 


European  Commission 
officials  are  examining  a 
compromise  plan  which 
could  persuade  the  UK  to  lift 
its  threat  to  veto  the  intro- 
duction of  an  EU-wide  with- 
holffing  tax  on  income  from 
savings  and  investioents. 

'The  compromise  wonld 
protect  iastitutiCHial  holders 
of  international  bonds  frira 
having  to  pay  the  withhdd- 
Ing  tax  while  bitting  individ- 
ual investors  by  esempting 
issues  whose  minimim  hold- 
ing is  more  than  €40.000 
(P43,20Q>. 

Vk  'Utreshtrid  is  drawn 

'from  <»*igKT»g  EU  lagiidatinn 

<m  public  offerings  of  securi- 
ties, but  details  of  how  the 
cut-off  would  work  are  still 
unclear. 

Bankers  put  the  idea  to 
-the  Commission  last  year 
but  were  rebuffed.  But  Com- 
mission (^cfels.  csrrently 
negotfetii^  -with  the  UK  gov- 
ernment, now  favour  the 
cut-off  as  lees  cumbeisome 
than  other  , ideas.  However, 
they  say  an  aeross-the-board 
emmption  for  international 
bonds  has  been  ruled  oat  as 
unacceptable  -to  other  ED 
member  state&  - 

Ihe  proposed  withholding 
tax  - part-of  a package  of 
measures  aimed-tp  out 
“unfeir"  tax.  competition 
within  the.  £U  - is  stHl 
apposed  by  tbe  .(^  of  Lon- 
don whi^  claims  the  tax 
would  drive  the  interna* 
tional  bond  oiarket  out  of 
the  EU  to  countries  such  as 
Switzeriand  where  there  is 
no  whhboIcBng 
' Nevertheless,  the  bond 
toctostry  is  wmkzzig  mi  ways., 
nf  TimtHrig  damage  if  the  tax 
is' totitidQced.  As  a-vmiiu- 
mnni,  bankets -Walot  ^istii^ 
issum  to  be  exempted  by  a 
“grend&tber”:  clause, 
fttture  issues  aimed  at  ffie 
wholesale,  market  to  be 
excluded  by  a mechanism 
suchas  the  cnf-off  point 

Without  Britiah  support, 
tlm  tax  cannot  be  httrocbuced 
as  it  has  to  lu^  the  tuani- 
mous  iqgtrova!  tf.aH -15  £D 
member  states:  <jordofi' 
Brown,  the  charxrflof  of  ti» 
exchequer. has /^id  be 
would  sot  siqipori iiQr.zQrai-' 
sure  that  damaged  Britain’s 
ecoiURnic  intrats.; ' 

Loxembourg  also-  has'  res^' 
ervations  about  the  plans- 
which  ^:be  discossed  by 
finance  xninisters  atmi  iniio^ 
mai  mee^  in  UresdfeL  on  . 
April  IB.  However.-,  an  EU- 
offidtfsaM  there  were  7wo)> 
ryi^  sigD^”  finm  a mm- 
ber'of  .men^  states,  nota- 
bly France  Belgium., 
that  tfa^  were  dbhiciiDed  to' 
accept  any  * »myHdan  for 
international  hm^as  the 
price  for  •^nning  - UK 
approval.  ‘ 


lar.  It  also  eradicates  the 
Influence  of  one  tf  the  f&em- 
lin’s  most  per^^ye  pomr 
brokers  and  rivals  of  Hr  Fri- 
makov.  Intriguingly,  Mr 
Yeltsin’s  press  secretary 
denied  the  pi^^t  had  any 
prior  knowted^.  that  the 
arrest  warrants  had  been 
issued. 

The  attack  on  Mr  Berezov- 
sky also  shows  the  prime 
mhuster's  campa^  against 
corruption  is  tnrnii^  seri- 
ous. Hr  Primakov  appeare 
intent  on  restoring  the 
anthority  of  the  state  and 
dismantling  the  power  of  the 
seven  oligarchs,  who 
financed  Mr  Yeltsin’s  rejec- 
tion campaign  and  then 
reaped  the  economic  bene- 
fits. Yet  It  is  hard  to  view 
the  charges  of  financial 
manipulation  levelled 
against  Hr  Smolensky, 
chairman  of  SBS-Agro  bank, 
in  the  same  l^L 

Indeed,  the  accusations 
raise  questions  about  the 
integrity  of  Mr  mmakov's 
own-govenuneat. 

In  the  aftermath  of  the 
financial  crisis  in  August, 
the  central  bank  backed  Mr 
Smolen^  and  pumped  mil- 
. lions  of  roubles  of  soft  cred- 
its into  his  troubled  bank  to 
ke^  it  afloat 

The  son  of  Gennady  Kulik. 
one  of  the  most  senior  mem- 
bers of  Mr  Primal's  cabi- 
net, also  works  as  deputy 
chairman  of  SBS-Agro  bank. 

Moreover,  some  of  Russia’s 
other  "oligarchs'*  retain  con- 
siderable influence.  . 

Mikhail  Khodorkovsky, 
who  controls  the  giant 
Yukos  oil  group,  even 
accompanied  Mr  Primakov 


Power  brtecefs:  (dockwise  from  top  left)  Boris  Berezovfcsy  and  Aiaxander  Smotonsky  have  had  arrest 
warrants  issued  against  them  while  VMimfr  Potanin  struggles  to  salvage  Ms  business  snipire  and 
Vlacfimir  Gusinsky  ^spears  to  have  come  to  an  accommodation  wHh  the  authorities  Reuters,  AP 


on  his  aborted  trip  to  Wash- 
ington last  month.  In  spite  of 
vociferous  complaints  from 
minority  shareholders  in 
Yukos  about  abase  of  inves- 
tor rights.  Hr  Ebodorkov^ 
clearly  remains  a player  in 
the  political  game. 

Vladimir  Gusinsky,  head 
of  the  Media-Most  television 
and  banking  empire,  also 
appears  to  have  reached  an 
accommodation  with  the 
news  powers-that-be. 

His  control  of  the  NTV 
television  station  will  make 


him  a hi^y  influential  fig- 
ure in  the  run-up  to  the  par- 
liamentary elections  in 
December. 

Though  seriously  weak- 
ened by  the  finandal  crisis, 
Vladimir  Potanin,  bead  of 
the  Interros  fiimncial-indus- 
trial  group,  is  singling  to 
salvage  his  business  empire. 
The  last  of  the  two  oligarchs, 
Mikhail  Fridman  and  Pyotr 
Aven,  of  Alfa  Bank,  appear 
to  be  bavii^  more  success  in 
revivi^  the  fortunes  of  their 
financial-industrial  groifo. 


Temptii^  though  it  is  to 
sound  the  death  knell  for 
Russia's  "oligarchy",  it 
would  clearly  be  premature 
to  do  so. 

The  oligarchs'  strength 
was  built  on  the  weakness  of 
the  government. 

In  spite  of  Mr  Primakov’s 
best  efforts,  the  country's 
continuiDg  economic  convul- 
sions are  only  fiirther  erod- 
ing Che  state’s  powers, 
leaving  plenty’  tf  room  for 
big  business  to  wield  its 
influence. 


Dutch  hit 
by  gloomy 
growth 
forecast 

By  Bordon  Gmnb  bi  Amstenlam 

The  Dutch  official  forecast 
for  economic  growth  this 
year  was  yesterday  cut  to 
Just  2 per  cent,  signalling 
potential  problems  for  the 
government  is  zneetutg  its 
budgetary  targets. 

The  projection  for  real 
gross  domestic  product  is 
down  from  the  2.25  per  cent 
Increase  previously  expec^ 
by  the  Central  Planning 
Bureau  (CPB)  - which  was 
also  the  miniitinm  annual 
average  assumed  when  the 
centre-left  coalition  to  The 
Hague  last  year  agreed  its 
spending  plans  to  2002. 

The  ^ure  compares  with 
a 3.7  per  cent  increase 
achieved  in  1998. 

The  CPB  said  the  cause 
was  a shaip  wakening  in 
world  trade  growth,  adding 
that  its  forecast  was  still  at 
risk  of  being  too  optimistic 
unless  that  activity  picked 
up  agedn  in  the  second  quai> 
ter. 

Export  performance  was 
likely  to  be  better  next  year, 
but  an  expected  easing  In 
domestic  demand  at  that 
point  would  leave  gross 
domestic  product  growth  flat 
at  2 per  cent  for  2000,  the 
forecsfiting  agency  said. 

The  government  deficit, 
which  in  Emu  terms  reached 
as  low  as  0.7  per  cent  of  GDP 
last  year,  would  as  a nreult 
rise  to  1.75  per  cent  in  1999 
before  dipping  to  1.5  per  cent 
the  following  year. 

Government  debt,  the  one 
measure  by  which  the 
Netherlands  fails  to  meet 
Maastridit  critoia  for  state 
finances,  would  come  down 
DO  further. 


£'VV" 


‘‘  Since  1920,  Nestle  has  been 
located  in  Barcelona  from  where  we 
adi^  ojt^  Spanish  business.  We 
feel  fine  and  c^^imortable  there  and  are  confident 
that  we  will  continue  to  do  so.^^ 

Petet  Bmbeek-Leimaihe,  Chief  Execufire  Officer,  iSestle  WoHdwide- 


■ 'M*  ■t.f' 


. / . •••  /.j'-i-'..  '' 



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. OK  of  the  newtesx  ahd.  nun  Imva^'pn^^ia^^  d9;tt.Ji)sw  dm.wDridlptie  tf 

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BARCELONA 

The  5oiiibern  ColeKay  lo  Enrope 


: i 


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financial  T1M£S  . THURSDAV  A^RiLS 


ASIA-PACIFIC 


Bank  of  Japan  cash  ready  for  Y2K  Bus  link 


new 


By  Alexandra  Nusbaun 
biTolqro 


The  Bank  of  Japan  (BoJ)  has 
disclosed  details  of  a mas- 
sive Y40/n0bn  ($32Sbnl  con- 
tingency plan  to  tackle 
unforeseen  Year  3000  prob- 
lems - the  first  such 
announcement  by  a central 
bank  of  an  industrialised 
nation  and  an  unprece- 
dented act  of  disclosure  by  a 
Japanese  instttution. 

The  funds  ocnUd  be  used  Co 
cover  overdrafts  from  unex- 
pected demand  caused  by 
Year  2000  (Y2K)  problems  at 
local  Qnancial  Institutions, 
according  to  the  Bank.  Ilie 
BOJ  said  it  usually  kept  a 


large  supply  of  banknotes  on 
band,  but  said  these  funds 
would  be  made  available  to 
handle  Year  2000  issues. 

**Tbe  presence  of  these 
reserves  could  eventually 
fbrestall  a confidence  crisis,'* 
said  Walter  Altherr.  analyst 
at  Jardine  Fleming  Securi- 
ties. 

The  magnitude  of  the 
reserves  has  reinforced  the 
seriousness  with  which  the 
BoJ  views  the  millennium 
bomb,  the  scenario  in  which 
computers  misread  the  year 
2000  when  represented  by 
“00”  as  1900  and  fbll  to  pro- 
infonnation  or  collapse. 

"We  have  published  our 
oontingenoy  plan  as  a sign 


that  we  are  committed  to 
Year  2000  issues  and  to  pro- 
vide a model  for  other  finan- 
cial institutions,”  said  the 
Bank. 

“It  is  important  that  they 
develop  contingency  and 
action  plans  that  are  conrist- 
ent  with  oars.” 

The  BoJ  disclosure  coin- 
cides with  debate  over 
Japan’s  level  of  Year  2000 
readiness. 

Limited  disclosure  and 
sketchy  data  have  fuelled 
concern  among  foreign 
investors  Umt  Japan  may  lag 
behind  other  industrialised 
countries  In  terms  of  Year 
2000  readiness. 

While  Japan's  financial 


POTENTIAL  MILITARY  USE  CHINA  MAY  OBJECT  TO  PROJECT 


Dasa  begins  work  on 
satellite  for  Taiwan 


By  Mura  Oidde  ki  IblpM  and 
Lfta  Hamtachfeger  in  Frankfurt 


Germany’s  DaimlerCbrysler 
Aero^ce  (Dasa)  has  b^un 
building  an  earth  observa- 
tion satellite  with  potential 
military  ap{dications  for  sale 
to  Taiwan,  although  the  Ger- 
man govenunegot  has  yet  to 
approve  its  export. 

Officials  In  Tmwan  Insist 
the  $80m  satellite  will  be 
used  for  civil  projects  only, 
but  its  potential  use  for  mili- 
tary surveillance  is  likely  to 
raise  dtplomatic  issues  with 
China,  which  fiercely 
Of^xses  all  arms  sales  to  its 
island  rival. 

Pressure  is  also  growing 
within  Taiwan  for  the 
deployment  of  better  early 
warning  and  surveillence 
systems  following  reports  of 
increased  Chinese  missile 
deployments  against  the 
island. 

A Dasa  spokesman  said 
the  company  was  optimistic 
that  export  approval  for  the 
satellite  would  be  granted  in 
the  next  four  weeks,  saying 
that  Taiwan  had  said  it 
would  “primarily  use  the 
satellite  for  civil  purposes”. 

Germany’s  Federal  Export 
Office  declined  to  comment 
on  the  deal  hut  said  all  sat^- 


lite  exports  to  non*ED 
nations  required  special 
approval 

Construction  of  the  Rocsat 
H satellite,  which  will  be 
able  to  pick  out  objects  on 
the  ground  with  a width  of 
two  metres  or  more,  had 
been  started  to  ensure  it  was 
ready  for  launch  as  jdanned 
in  late  2002,  said  David  Cbu, 
deputy  director  of  T^wan’s 
National  Space  Programme 
Office. 

Dasa  would  cover  all  costs 
if  the  export  licence  was 
reused  and  Taiwanese  tech- 
nldans  were  already  work- 
ing on  the  project  in  Ger- 
many, Mr  Cfau  said. 

He  said  the  satellite's 
imaging  resolution  was  too 
low  for  nulitary  use  and  that 
it  would  undertake  oceanic 
and  geographic  observation 
and  pioneering  research  into 
lightning  that  dischai^d 
out  into  space  instead  of 
toward  the  ground. 

However,  an  aerospace 
industry  official  close  to  the 
project  amfirmed  the  Rocsat 
n had  potential  military 
applications,  raising  the 
prospect  that  its  eiroort 
could  prompt  opposition 
from  Belqing. 

China  considers  Taiwan  a 
reb^  province  and  sees  arms 


sales  to  Taipd  as  threats  to 
its  cherished  dream  of 
national  reunification. 

Parris  Chang,  a Taiwanese 
opposition  legislator  and 
expert  on  military  affairs, 
said  satellites  such  as  Rocsat 
Q should  be  used  to  monitor 
the  mainland  iusWl  of  for 
irrelevant  research. 

“What's  wrong  with  using 
it  for  military  purposes?  We 
are  being  threatened  by 
China  and  we  need  early 
warning  systems."  be  said. 
“We  need  the  help  of  satel- 
lites.” 

Chinese  military  moderni- 
sation has  focused  the  atten- 
tion of  many  in  Taiwan  on 
the  need  to  counter  the 
mainland’s  growing  missile 
battalions,  prompting  impas- 
sioned debate  on  possible 
involvement  in  a planned 
US-led  theatre  missile 
defence  (TMD)  system. 

Even  if  used  for  surveill- 
ence, the  Rocsat  □ would 
hardly  fill  the  island's  intelli-  ' 
gence^thering  gap,  particu-  | 
larly  since  its  low  orbit 
means  its  position  relative  to 
the  ground  changes  con- 
stantly. Many  analysts  con- 
sider an  expanded  satellite 
programme  essential  to 
upgrade  Taiwan’s  command 
and  control  systems. 


institutions  have  been 
actively  modifying  and 
tng  their  systems  in  prepara- 
tiort  for  Year  2000,  few  com- 
panies have  developed 
contingency  plans. 

About  51  per  cent  of 
banks,  S3  per  cent  of  insur- 
ance companies  and  41  per 
cent  of  seonities  companies 
had  carried  out  tests  of  criti- 
cal computer  systems, 
according  to  September  1998 
reports  from  financial  Insti- 
tutions. 

However,  the  percentage 
of  companies  with  contio- 
gency  plans  in  place  at  that 
time  was  far  lower:  8 per 
cent  of  banks.  13  per  cent  of 
the  insurance  companies 


and  5 per  cent  of  securities 
companies. 

The  BoJ  also  announced 
that  preparations  were 
under  way  to  handle  inter- 
bank settlements  manually 
on  Monday,  January  3. 

The  bank  said  system 
checks  would  be  conducted 
on  Sunday.  January  2 to 
determine  If  the  bank 
needed  to  switch  to  manual 
processes  for  the  first  busi- 
ness day  of  tbe  millennium. 

And,  the  bank  said,  it 
would  compile  a list  of 
contacts  at  private  sector 
financial  institutions,  gov- 
ernment ministries  and  for- 
eign central  banks  before 
year-end. 


B angladesh- India  ties 


By  OavM  Cliazan 
hi  Dhaka 


China  softens  on 
currency  pledge 


By  James  Harding  in  Shanghai 


China’s  commitment  not  to 
devalue  its  currency  is  not  a 
“pennanent  pledge”,  a senior 
government  economist  was 
yesterday  quoted  as  saying 
by  an  official  newspaper. 

“The  policy  decision  not  to 
devalue  the  renminbi  is 
made  according  to  the  cur- 
rent situation.'’  Wang  Meng- 
kui.  director  of  the  Develop- 
ment Research  Centre  of  the 
State  Council,  China's  cabi- 
! net,  was  quoted  as  saying, 
“ft  is  not  a permanent 
' pledge.” 

Chinese  leaders  have 
repeatedly  promised  that 
they  will  not  devalue  the 
Chinese  currency,  a move 
that  smne  fear  could  desta- 
bilise Asian  economies  and 
prompt  another  round  of 
regional  currency  deprecia- 
tions. 

On  his  arrival  in  tbe  US 
this  week.  Zhu  Rongji,  Chi- 
na's prime  minister,  made  a 
point  of  reiterating  the  com- 
mitment to  maintain  Chi- 
nese currency  stability.  “1 
state  again  that  the  Chinese 
renminbi  will  not  be  deval- 
ued,” Mr  Zhu  ^d. 

Tbe  comments  yesterday 
made  in  tbe  official  Eco- 
nomic Informatioa  Daily  did 
not  suggest  Beijing  has  any 
plans  for  an  exchange  rate 
a<yustmeiit  But  Mr  Wang’s 
quahfication  to  the  niHleval- 


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FINANCIAL  TIMES 


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Sis^.'T'Cv:'  'iTCflS  'VB 


uatioQ  pledge  underlines 
how  Chinese  econoznic  pol- 
icy advisers  have  begun  to 
consider  tbe  conditions 
under  which  China  could 
have  to  devalue. 

“If  great  changes  took 
place  in  the  international 
economy,  it  would  be 
unlikely  Ctuna  would  uot  be 
affected,"  Mr  Wang  was 
quoted  as  saying.  The  news- 
paper did  not  elaborate. 

Chinese  officials  have  pre- 
viously indicated  that  a 
sharp  depreciation  in  the 
value  of  the  Japanese  yen 
would  weigh  heavily  on  Bei- 
jing’s thinking,  as  a weaker 
Japanese  currency  would 
add  to  the  problems  facii^ 
China’s  exporters. 

A government  official  said 
last  month  any  decision  to 
devalue  would  depend  on 
whether  China  could  main- 
tain acceptable  levels  of  eco- 
nomic growth  and  social  sta- 
bility. 

in  Los  Angeles,  Mr  Zhu  ' 
offered  an  upbeat  forecast  : 
for  the  Chinese  economy,  ' 
suggesting  that  a rebound  is 
already  under  way  and  fore- 
casting gross  domestic  prod- 
uct growth  this  year  will 
outstrip  the  7.8  per  cent 
achieved  in  1996  as  well  as 
the  7 per  cent  target  for  1999. 

••China's  economic  perfor- 
mance this  year  wiU  defi- 
Ditely  be  better  than  last 
year,"  Mr  Zhu  said. 


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AU  AMEnCANS  « FOREX  * EMOKANS  « NEWS  1 CHARTS 


The  first  direct  bus  service 
from  Bangladesh  to  India 
has  made  a trial  run,  carry- 
ing Bangladeshi  officii  and 
businessmen  firom  Dhaka  to 
Calcutta. 

The  launch  of  tbe  passen- 
ger service,  expected  later 
this  month,  signals  a new 
openness  In  India’s  attitude 
towards  its  smaller,  poorer 
neiglfoour. 

It  has  also  raised  hopes  of 
rasier  travel  for  the  many 
Indians  and  Bangladeshis 
with  relatives  living  on 
both  sides  of  the  border,  and 
better  trade  relations  which 
improve  the  economic  pros- 
pects of  an  Impoverished 
corner  of  tbe  subcontinent 

As  tbe  bus  drove  across 

the  border  from  Ranglariash 

it  was  greeted  thousands  of 
I cbeming  Indians  wbo  lined 
I the  road  for  several  mil^  in 
i spite  of  oppressive  heat  and 
humidity. 

A brass  band  played  a 
Bengali  nationalist  song  by 
tbe  poet  D.L.  Roy. 

'“niis  bus  service  wiU 
facilitate  travel  and  trade, 
and  will  be  of  great  benefit 
to  Bangladesh  and  India.” 
said  Azman  Hossain  <^w- 
dhury,  the  nhairmat^  of  the 
Bangi^esh  Road  Transport 
Corporation  and  one  of  the 
passengers  on  tbe  bus. 

“We’re  hoping  that  it  will 
mark  the  dawn  of  a new  and 
more  cordial  relationship 
between  our  countries.’' 

When  the  British  left  Indfe 
and  the  subcontinent  was 
partitioned  in  1947,  Bengal 
was  divided  into  the  Moslem 
majority  state  of  East  Pakis- 
tan. which  later  became  Ban- 
gladesh,'and  the  predomi- 
nantly Hindu  state  of  West 
Bengal  in  north-eastern 
Tnrtifl. 

But  for  many  Bengalis, 
their  common  language  and 
culture  form  a bond  that  is 
stronger  than  the  religious 
divide. 

The  links  between  tbe  two 
Ben^ls  remain  close  despite 
rivalry  between  West  Ben- 
galis. known  coUoquiaHy  as 
“Ghotis”,  and  the  “Bangals” 
of  Ban^adesh. 

Many  Ghotis  claim  to 
speak  a purer  form  of  Ben- 


■ j;*  -L-; 


v‘  "'T  V 


gali  than,  their  Bangal  cous- 
ins. they  consider  Cal- 
cutta to  be  the  home  of  Bmi- 
gali  culture 

But  the  border ' between 
Bangladesh  and  India  was 
never  closed  as  was  the  bor- 
der between  Pakistan  and 
India. 

Half  a million  Bangla- 
deshis visit  India  each  year. 

Indian  forces  hefoed  Ben- 
gali Moslems  to  win  indepen- 
dence from.  Pakistan  and 
found  Bangladesh  in  1971 
after  a bloody  conflict 
triggered  by  Pakistan's 
attempts  to  force  the 
Bengalis  to  abandon  their' 
langimgp  in  fevouT  Of  Urdu, 
the  national  language  of 
Pakistaa. 

But  until  the  inauguration 
of  a direct  bus 'service, 
between  Pakistan  and  India 
last  month,  mutual  suspi- 
cion between  the  govern- 
ments of  Bangladesh  and 
India  had  prevented  a direct 
service  between  tbe  two 
cooutries. 

Instead,  travallers  were 
forced  to  chai^  buses  at  .tbe 
border,  carrying  their  lug- 
gage  fr^  one  border  post  to 
the  other,  ofien  being 
delayed  for  hours  before 
they  could  cross. 

“Wth  this  new  direct  bus 
service,  border  formalities 
will  be  far  easier,”  said 
AJC  Wakil  Ahmed,  the  head 
of  customs  at  the  Benapol 
border  post  on  the  Bangla- 
deshi side. 


“About  a tiiousand  peoj^ 
cross  this  border  ,ev^ 
mid  there  are  usually.'  kag. 
queue,”  he  said.  . 

But  travellm'vdte'  Wexe. 
stranded' at  the  bbrd»  While 
the . much-publiidsed  bos 
cross^.  tttto  India  were  lera 
enthusiastic. 

Bejgim  Nahar^  standing  ^; 
the  roadside  with.'faor.  b^' 
while  her  biisb^d  com- 
pleted the  znoiv  Iop 

malities,  said  a diiWit  bos: 
service  alone  would' not  alle- 
vtate  the  peon  of  travMlipg 
between  Bangladesh . and 

TfiAia  . . 

“At  the  moment  it  tal^  . 

hours  to  fill  out  . all,  the  . 
fon^"  she  said.  ”We  want 
less'  bureaucracy  asd.^eed- . 
fer  formalities.”  . 

"hidia  has  been  trying  to' 
convince  Ban^adeshis 
It  is  'adopting  a friendlier 
attitude  toward  ite  'smaBtf 

neigh  Honrs. 

Sunil  Outt ' the  popular 
Indian  film  star,  visited 
-Dhaka  last  ^k  and  call^ 
for  a new  spirit  .of  cosop»a> 
tion  in  South  Asia. 

But  some  Ban^adeshis 
continue  to  doubt  India's 
sincerity.  * " 

“When  the  bus . reaehed- 
Calcutta,  there  was  nb  one. 
from  the  central  government 
to  ' welcome  us."  said 
one  . passenger,  a Bangla- 
deshi who  requested  ano- 
nymity. 

“What  kind  of  signal  does 
that  give?” 


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FORMER  PARIAH  REGIME  MAY  ATTEND  FREE  TRADE  TALICS  □ FUGHTS  RESUME  AFTER  SANCTIONS  SUSPENDED 

Italy  champions  Libya’s  fehabilkati^^ 


- ii 


^*”Bte«nBoro 

labya  rauld  take  a Bret  st^ 
towards  re^ateri&g 
international  co«jSiuJ“ 

5SS  ii 

some  that  It  win  attend  a 

^S^.^,^»'opeaa  Union 
^ Metoerranean  countries 
on  free  trade  and  security. 

Following  Tripoli’s  hand- 
ler of  two  Libsi^  accused 

the  1S88  bombinsf  of  a Pan 
^ flight  over  Lockerbie 
Scotland,  the  Italian  govern. 


is  pressing  Ibr  Libyan 
offidals  to  be  admitted  to  a 
ministerial  meeting  in 

next  Friday  that  will 
ofrwufls  the  latest  stages  in 
the  so.called  ‘Maradona  Dn> 
cess". 

EO-Medlterranean 
talks  aie  aimed  at  setting  up 
a regimial  free  trade  agww. 
ment  by  the  end  of  the  nest 
decade.  Ubya's  tnrihMfipTi  ii^ 
these  talks  would  be  the  lat- 
est indication  of  Italy’s 
eSoits  to  bring  Trqioli  into 


the  intttnational  fold. 

Earlier  this  week;  Lam- 
barto  Dini,  Italian  foreign 
minister,  flew  to  'Uh^  idr 
talks  with  -the  country's 


imposed  on  Ubya  since  1992. 
i^e.'CN  movete^  in  the  re- 
opening'^stenday  of  tbe 
first  oomnerdal  flights  from 
to  hel^hbciiuxhag  eoun- 


leader  Col  Hnammer  tries  in  sem  yean  ' . 
OaditfB.  ji^  ime  day  after  Accorffing'  to  Italian  fo^ 


the  two  Lockeihie  subsets 
were  flown  to  the  Nethe^ 
lands  far  trial  H!s  visit  was 
fbe  first  to  Tripcdl  by  a Burn- 
pean  official  in  seven  years. 

At  tbe  same  time,,  the 
united  Nariooe  suspend^ 
the  sandaons  ffiat  have  been 


CLOBAL  DEVEUIPMEHT  fimance  report 

Aid  to  poor  nations 
falls  to  18-year  low 

BR#  ^ 


By  Robert  CbotB, 

Econamies  Bi%r 

Net  flows  of  overseas  aid  to 
developing  countries  have 
fitUen  to  their  lowest  level  in 
real  terms  since  1981,  with 
little  sign  of  a significant 
recovery  in  prospect,  the 
World  Bank  said  y^terday. 

In  its  annual  Global  Devel- 
opment Hnance  Report  the 
Bank  lamented  the  fret  that 
aid  flows  were  just 

as  tnmrovements  in  develop- 
ing country  policies  were 
making  them  more  eSbetivs. 

“Sefveral  low  income  coun- 
tries are  itiainwp  important 
eidvances  in  policy  reform. 
Reallocating  the  current 
lev^  of  aid  oi^  to  countries 
with  good  policies  and  large 
numbers  of  poor  .people 
could  substantially  increase 
the  number  of  people  who 
escape  poverty."  it  said. 

The  Bank  estimates  that 
2bn  of  the  world’s  2.7bn  poor 
people  live  in  82  oountrles 
which  have  adopted  , a good 
policy  environment  in  tbe 
1990s.  a precondition  for  aid 
flows  to  be  helpful  Policies 
in  sub-Saharan  Africa  and 
south  Asia  are  better  now 
than  at  any  time  in  the  pre- 
^dous  quarter  century, 

. Without  aid  there  wot^ 
be  an  additionaL  3Qia  ~poar 
people  in  developing  oouQ' 
tries  eadi  year,  based  on  a 
POTerty  line,  of  82  a day.  If 
existing  aid  flows  were  allo- 


cated more  efficiently,  ffiis 
could  lift  another  SQm  gut  gf 
poverty  eatSi  yea. 

Net  concessional  assis' 
tance  to  developing  coun- 
tries totalled  832.7bn  last 
year,  down  a little  on  1997 
and  a tturd  smee  1990.  The 
Bank  noted  that  this  was 
only  about  a sixth  of  the 
sum  pledged  under  rescue 
packages  to  Brazil,  Indon- 
esia, Kiorea,  Russia  md  ^lai- 
land  since  1997.  Of  the 
kl90bn  pledged  in  the  rescue 
packages,  $68bn  has  so  fax 
been  disbursed. 

In  real  terms  net  flows  of 


Only  four 
countries  met  UN 
aid  targ^ 


official  develt^naest  assis- 
tance foRby  6 per  cent  to  an 
18-year  low  in  1997,  tbe  latest 
year  for  which  data  are 
availalde  from  tbe  Organisa- 
tion fm  Economic  Coopera- 
tion aiDd  Development 
But  ai^rrusimataly  half 
this,  decline  was  es^lained 
by  ' the  depreciation  of 
most  industrial  country 
currendes  against  the  US 
doDar.  After  taking  this 
aind  the  reclassification  of 
Isr^l  as  a developed 
ecohomy  into  account,  tbe 
undarlying  decline  in  aid 


flows  was  2 per  ceo[L 

The  Bank  noted  that'<m]y 
Denmark,  the  Netherlands, 
Norway  and  Swdmi  devoted 
the  0.7  per  cent  ot  national 
. income  lecommended  by  tbe 
United  Nations  to  aul  flows. 
The  Qr^  of  Seven  leading 
industrial  countries  pay  a 
much  sm  aller  sxopation  of 
GDP  in  aid  and  th^  are 
responsible  for  much  of  the 
recent  decline. 

The  ouflocdr  for  a recovery 
in  aid  fUnm  remains  poor, 
the  Bank  believes.  Only 
three  countries  - Ireland, 
Sweden  and  Britain  - have 

annminftpd  jnrpaiaj^  IS  gld 

budgets  for  last  year.  But  aid 
flows  ^onld  also  rise  in  tbe 
Netherlands,  where  there  is 
a political  agreemmit  to  keep 
titem  at  08  per  cent 

Japan,  the  largest  donor, 
aimounoed  a 10  per  emit  cut 
in  aid  payments  in  fiscal 
year  19^  althoci^  amne  of 
this  decline  has  been 
restored  in  a sunplonentaiy 
bud^nt  For  industrial  coun- 
tries as  a whole,  aid  flows 
may  now  have  dropped 
bdow  OJi  per  cent  of  G1I9. 

Pressure  on  government 
spending  in  industrial  couie 
tries  has  been,  an  inqwrtant 
foctor  underlytog  ftlte  in  aid 
flows,  but  the  Bank  noted 
that  ^ rdationsidp  was  far 
from  strai^itforward. 

The  US,  Germany  and 
Sajpaa  have  an  reduced  aid 
as  a share  of  GIKP  by  around 


eigxi  ioinistiy  of^al^  the 
UN  security Veoiaidl. 'must 
decide  ~ irithis  \k0  days 
^erfher  to  end.ffie'SBi^ctions 
eompletely.;' ^tiis,  'ih^tum, 
TntwTw  tibaC.  the  US'  - as  a 
seeuriQr  ctmncfl'.  m«z^ber  - 
must  decide'  .-whether  to 


retain  its  own  sanctions. 

BfrDini  said  late  onThes- 
day  Bi^t  that  be  thoni^t 
"there  was  deeiie  in  Wash- 
ington to  move  to  a normali- 
sa^xm  of  bilateral  relations 
with  Tripoli,”  mid  that  “diffi- 
colt  issues  r^axdhig  terror- 
ism have  now  been  over- 
come.” However,  some 
eqierts  on  the  regkm  believe 
the  US  win  retain  its  sanc- 
tions an  the  same. 

By  striving  to  bring  ZitbyEi 
into  the  wi^  community. 


the  Italian  government  is 
ho^ng  that  its  companies 
will  gain  from  trade  with 
Tripoli,  particularly  inufl. 

Ubya  has  reserves  of 
about  StH^n  barr^,  about 
tile  same  as  the  North  Sea. 
Bui.  based  in  Rome,  pro- 
duces about  16  per  emit 
Libya’s  oil  and  is  seekiiig 
enstozners  to  back  Invest- 
ment in  new  gas  ixoduction 
from  the  Wafo  on 
Libya’s  coast,  and  a pipeline 
under  the  sea 


f—  •»' 


1890  »(.■  82  83  as  95 


' GRM'aoMnc  pnepecb ' 
mm  wsu 

— mm  Hgo-incoira caunMBs - 
\JMHaAvim 
' y — SteuwcDuiHBt 

* V. 

S,  » . fc 

‘ ‘'2-- = — 


biiNt,"v  -setse 

'■  .'.f.-..  1909  ...  ' 


CtoMi  Odtov 

2000.- 


0.07  percentage  points 
between  1992-93  and  1996-97, 
but  fiscal  eondltiozts  differ 
widdy  between  them.  In  the 
US  aid  has  faUen  rictim  to 
tighter  fiscal  policies  and 
public  scepticism  about  its 
eCfectivenesa.  It  has  been 
crowded  out  by  tbe  aiste  of 
unlficmroQ  in  Germany  and 
by  measures  to  boost  the 
domestic  economy  in  Japan. 

The  UK  recorded  the 
CTwTiBrf  dprihift  is  aid  as  a 
share  of  6DF  among  the 
Group  of  Seven  leadii^ 
'industrial  countries  between 
1992  and  1997,  tbe  period  of 
the  last  government  The 


incoming  Labour  govern- 
ment haa  agreed  to  raise  aid 
as  a share  of  during  its 
first  term  in  office. 

The  Bank  also  warned  that 
a greater  share  of  aid  spend- 
ing was  now  b^ug  devoted 
to  emergen^  relief  requfred 
by  wars  and  natural  disas- 
tere.  leaving  less  to  be  spent 
on  long-term  development 
objectives.  A greater  p(rolpo^ 
tkm  (tf  aid  buckets  was  also 
being  absorbed  by  adminis- 
tration costs. 

The  report  also  calculated 
the  total  debt  of  devel- 
oping countries  had 
increased  by  about  $150m 


last  year  to  just  under 
$2,S00bn.  Total  grants  to 
developing  countries  foS  by 
$2.7bn  last  to  $28bn. 

Among  higbly-lndebted 
poor  countries  - those 
potentially  eligible  for  extra 
debt  relief  under  joint 
initiative  of  the  Bank  and 
International  Monetary 
Fund  - outstanding 
long-term  debt  rose  by 
gisbn  last  year  to  SlGdJLbn. 
The  Bank  warned  that 
donors  woold  have  to  pro- 
vide more  money  to  finance 
tbe  initiative  on  its  present 
terms,  let  alone  cm  any  more 
generous  texm. 


Iraq  talks 
start  at 
Security 
Council 


With  scant  sissis  of  unity, 
the  15-member  UN  Security 
Council  yesterday  b^an  dis- 
cussions on  Its  deadlocked 
pohey  aa  disarmament  and 
sanctions  in  Iraq.  , Renters 
r^orts  New  York. 

In  an  effort  to  break  a 
political  stalemate,  the 
Council  in  early  February 
set  up  three  pwiels  - on 
weapons,  humanitarian 
issues  and  condensation  for 
Euwaiti  war  victims  all 
chaired  by  Celso  Amorim, 
BrazQ’s  UN  ambassador. 

Mr  Amorim  intEOduced  the 
panel  reports,  distributed  to 
members  late  last  memth. 
Initial  cloaedrdoor  Council 
dlseusrions  were  scheduled 
for  this  week  and  two  days 
next  week,  envoys  said.  But 
Afr  Amorim  predicted  diseus- 
skms  "coiild  take  weeks  if 
yon  are  lotting  for  a more 
long-tmm  solution”. 

vnth  the  Iraqi  economy 
deteriorating  r^idly  after 
nearly  nine  years  of  UN 
sanctions,  France,  Russia 
and  China  want  relief  as 
soon  as  postiUe  while  the 
US  and  Britain  blame  the 
misery  on  Saddam  Hussein’s 
refusal  to  rafinquish  we^ 
OEis  of  mass  destruction. 

Peter  Burleigh,  the  chief 
US  ddegate  ^id  Washing- 
ton was  still  "definitely" 
opposed  to  lifting  sanctions, 
saying  the  panels  made  "it 
{dear  tiiat  Iraq  has  not  dis- 
armed", one  requirement  for 

IlfliTig  file 

The  panel  on  disarmament 
conchmed  that  most  but  not 
an  of  Iraq’s  dangerous  weap- 
mia  had  been  destroyed.  The 
humanitarian  panel 
suggested  sanctiems  be  eased 
and  private  investment  be 
allow^  in  Ba^idad’s  oil  and 
other  industries. 

Missing  from  the  discus- 
soon,  however,  is  Iraq  itself, 
whi^  insists  it  has  so  more 
predubited  weapons  and  fiiat 
all  sanctions  must  be  lifted 
immediately.  'Hiere  also  Is 
no  sign  Iraq  is  willing  to 
co-operate  with  arms  inspec- 
tors even  if  there  were  some 
relief  from  sanctions, 
imposed  after  Baghdad’s 
1990  invasion  of  Euwatt. 


Move  to 
establish 
bank  in 
Nairobi 

ByMafcfoniBrtaliairoU 
The  G77  Chambers  of 

firtimnarCT,  the  OTgUlISatHm 

u-niring  tradeiS'  from  tiie 
world’s  132  poorest 
countries,  has  caUod  for  a 
development  bank  to  be 
apte'wic'had  jn  Nafrobl  withfo 
the  next  two  years,  o&rlng 
preferential  credits  to 
developing  country 
ejqiorters. 

Tariq  Sayeed  and  Boney 
Eatatumba,  tbe 

organisatkm’s  out^dng  and 
incoming  chairmen,  will 
presmit  thrir  plans  before  a 
G77  foreign  ministerial 
meeting  at  New  York  In 
September,  where  they 
expect  to  retteive  final 
approval  for  tbe  projecL 

Four  categories  of  investor 
will  be  caQed  on  to  take  iqi 
shares:  SO  per  cent  for 
business  institutions  in  G77 
CDuntrteB  and  China,  80  per 
cent  £e»-  fbe  Organisation  for 
Economic  Co-operation  and 
Development  and 
nmltmafimial  ^ngHt^^finnS|  80 
per  cent  for  financial 
institutions  in  G77  countries 
and  to  per  cent  for  G77 
pnmnmients  and  China.  The 

ig  aiTTiiTig  tor  an  initfal 
capital  of  Slbn. 

"WhSe  thme  are  Onaw^ai 
institutions  dealing  with 
develop!]^  countries,  the 
funds  are  not  readily 
availaUe  to  eqxnters,”  said 
Mr  Sayeed,  following  a 
G77-CO  genmal  assembly  in 
Kampala. 

"Our  concept  is  to  give 
exporters  funding  at  a 
relatively  low  rate;  we  would 
9ve  prefiwence  to  those  who 
export  to  other  developing 
countries.” 

The  bank  was  conceived  in 
19SS,  and  a feamlnlity  study 
> p^  for  by  the  Kenyan 
government  - was  recentiy 
completed. 

Mr  Sayeed  says  he  already 
has  considerable  support 
from  other  development 
banks  and  hopes  that  tbe 
International  Finance 
Corporation,  the  World 
Bank's  lending  arm.  will 
take  UP  18  per  cent  of  the 
shares. 


- 


OR  MAKE  A DREAM  COME  TRUE? 


% 


^ I 


3-S22 


S'" 


•t  f 


e 


tIF 


Ignoring  dlemotive  energy  is  no  cdlarnalive.  Keeping  pewe 
with  the  worlds  oceeiaraling  demand  (or  energy  aid 
supplying  poww  to  mmole  aecs  require  Shell  to  pursue 
fenewedde  resouross  like  sobr,  btomoss  and  wind  energy  . ‘ ‘ . 

Vlfe  established  SheO  Inlerrialional  Renewables  with  o 
US$500  miHion  commitmert  ta  dewlap  these  new 
opportunities  cunmarckiliy.  One  of  our  goals  b to  tniolEe  tolar 
energy  chec^mr,  inore  efficient  arid  more  accessible, 
both  tor  businesses  and  hones.  It's  part  of  our  cormnkment' 
to  sustalnafate  development  babndng  economic 
progress  with  environmental  care  ond  sodd  respensl^lily. 

So  wiffi  red  gooh  and  investment  energy  from  ihe  sun  . 

con  be  more  than  ]usi  a daydream.- 

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FINANCIAX- TIMES  THURSDAY-AP^si^ 


WORLD  TRADE 


Left  A woman  martmta  bananas  in  St  Uida,  one  at  the  Carftibean  produesrs  the  EU  wants  to  help  Centre:  Sir  Leon  Brittan,  SJ  bade  commissioner  and  key  player  in  the  dBsputa,  waves  a (riece 
press  eonfsrsnee  on  bananas  Right  Packing  bananas  in  Colombia,  one  of  the  Latin  American  countries  affected  by  the  EU  Import  restrictions 

BANANA  DISPUTE  UNCERTAINTY  ABOUT  EUROPEAN  RESPONSE  LEAVES  BUSINESS  COMMUNITY  UNCERTAIN  ABOUT  SANCTIONS 


of  paper  ate 


European  exporters  confused  by  war  of  words 


By  Kerin  Brawn  and  Sathnam 
Sangfiera  ta  London,  and  Darid 

Owen  In  Parts 

The  European  business 
community,  already  angered 
by  the  threat  of  US  sancQoas 
over  the  tmnana  Uade.  was 
yesterday  struggling  to 
make  sense  of  the  latest  war 
of  words  between  Washing- 
ton and  Brussels, 

As  US  oCTiclals  claimed 
victory  in  the  wake  of  an 
unpublished  World  Trade 
Organisation  ruling  on  the 
banana  dispute.  It  was 
unclear  whether  the  Euro- 
pean Union  would  back 
down  or  Qgfat  on  against  ear- 
lier adverse  WTO  rulings. 


The  uncertaint>’  left  Euro- 
pean exporters  w'hicb  fig- 
ured on  the  original  list  of 
goods  selected  by  cbe  US  for 
100  per  cent  penal  tariffs 
unsure  whether  their  prod- 
ucts would  be  hit  by:  sanc- 
tions or  not- 

“This  is  a very  difficult  sit- 
uation for  European  busi- 
nesses because  they  ha\*e  ni> 
certainty  about  what  is 
going  to  happen,'*  said  Moni- 
que  Julien,  director  of  exter- 
nal affairs  for  Unlce,  the 
main  European  business 
organisation, 

“We  need  to  study  tliis 
report,  but  it  is  not  clear 
that  this  process  is  over.** 
she  said.  “Our  main  concern 


is  to  avoid  sanctions  on  com- 
panies that  would  suffer 
because  of  an  issue  they  are 
not  directly  concerned 
ftitb." 

Erick  Boutry.  managing 
director  of  France’s  Society 
des  Caves  de  Roquefort,  said 
bis  reaction  if  sanctions 
were  applied  would  be 
-‘incomprebensjon'’. 

He  said  there  were  no  US 
producers  of  feta  cheese 
made  from  sheep’s  milk,  so 
the  company's  product  did 
not  compete  Kith  L'S  manu- 
facturers. Louis  VuiRoo,  the 
French  leather  goods  nmtiu- 
facturer.  cannot  understand 
why  it  had  been  targeted, 
since  it  has  no  connection 


with  the  banana  trade. 

Some  busiii«>ses  said  they 
had  already  lost  revenue 
because  the  threat  of  sanc- 
tions had  prompted  US  buy- 
ers to  redirect  orden$  to 
othvr  coantrie.<.  Business 
contacts  have  also  been  dis- 
rupted. posing  problems  for 
the  future. 

“Our  members  have  been 
very  badly  affected.~  said 
Isabel  Welch,  of  the  UK's 
Gtfrware  Association.  “The 
threat  of  the  sanctions  has 
resulted  in  Aniencan.s  can- 
celling orders  with  EU  .sup- 
pliers and  our  members  will 
now  have  to  begin  the  pro- 
cess of  re-esLtbli.shing  these 
contacts.** 


fan  Barnet,  managing 
director  of  Shearer  Handles 
in  Gl^gow.  which  has  a 
turnover  of  £1.5m  ($2.4mi 
said  his  company  had  lost  at 
least  £50.000  since  mid  Janu- 
ary. Mr  Barnet  said  he  was 
“absolutely  steamed  up 
about  the  behaviour  of  our 
politicians  and  EU  adminis- 
tration. It  has  taken  them 
five  years  to  sort  it  out  and 
some  permanent  damage  has 
been  done  to  our  trade  with 
the  US.“ 

To  complicate  the  issue, 
the  US  said  it  would  take  a 
few  days  to  refine  its  orginal 
list  of  imports  ~ worth 
$5:;Qm  but  revised  down  to 
S352m  last  month  - because 


How  the  dispute 

unfolded 


the  WTO  disputes  panel  said 
It  was  entitled  to  impose 
only  gl91m  of  tartC&. 

Thai  means  that  if  the 
sanctions  go  ahead,  they  will 
be  even  more  arbitrary, 
because  some  companies 
will  be  excluded  while  others 
will  be  hiL 

Businesses  and  European 
governments  continued  to 
urge  the  US  not  to  impose 
sanctions  against  companies 
with  no  connection  with  the 
banana  trade,  arguing  that 
penalties  against  innocent 
bystanders  were  morally 
mgustiliable. 


EdtfiDrial  comment,  Page  17 


May  19:  GATT  pan^  finds 
against  restrictions  in  EU 
states  (“Banana  1”). 

EU  blocks  panel  report 
from  being  adopted  by  Galt 
Council. 

July  1:  EU  implements 
ringle  market  banana 
Regulation  404:  claims  It 
meets  Gatt  obtlgatione. 

1994 

Jan  18;  Gatt  pan^  finds 
against  EU's  new  Regulation 
404  rBanana  11“). 

Fdb  T.  EU  blocks  “Banana 
ir  panel  report  from  being 
jyiopfed  by  Gatt  CounctL 

1996 

US.  Guatemala.  Honduras. 
Mexico  and  Ecuador  (G5) 
bring  formal  WTO  case.  EU 
insists  regime  meets  WTO 
rules.  . 

*ni6  65  hold  formal  WTO 
cortsultahons  vrifri  EU.  EU 
refuses  to  change  regime. 
Sept  EU  rebuffs  US  efforts 
to  discuss  Ghange8,-'Stating 
no  change  possible  during 
WTO  case. 

1997 

May  ^ WTO  panel  finds 
against  EU  regime  (Banana 
HI). 

June  20:  US  Trade 
Representative  Charlene 
Barshefoky  asks  Sir  teon 
Brittan  for  consultations. 

July  11:  EU  aF^^eais  i^ahrisl 
19  findings  in  the  WTO 
panel  report. 

July  29:  US  (voposes 
possible  solutions  to  EU. 
Brussels  says  it  ‘is  too  early 
to  discuss  them. 

Sept  9:  WTO  appeals  body 
upholds  panel  findings  of  EU 
violations. 

Sept  25:  WTO  Dispute 
Settlement  Body  (DSB) 
adopts  panel  and  appeate 
body  reports.  EU  condemns 
WTO  reports  and  tgrtores  G5 
request  for  negotiations. 

1998 


' Jan  8:  WTO  aitohrabac.g^veg 
EU  until  January  1, 1999to 
comply  with  WTO  mTinigs. 
June^European  r 
j\giicuKure  Courua  ad(^ 
modifications  to  benana ' ' 

• measures,  saying  theymeet 
WTO  rules..  - - 

1998 

Feb  5;  EU  rebuffs  G6  ^ 
plus  Panama^  concerns  at' 
Vin^  about  draftiEU  ban^ 

plan.  

Feb  12:  EU  rebuffs  US 
detailed  legal  corroems  • 

about  a new  banana  plan  in 
Bruss^  consultations. 
Mar25:G6atDSBcallf(v- 
negotiations.  EU  complams  . 
G6  statement  is  premature. 
May  20;  US  requests 
(Ganges  to  EU  plan  at  talks 
in  Geneva.  EU  rejects  .■ 
request 

June  19;  Barshefo)^  writes 
to  EU  member  states  sta^ 
ot^ections  to  Brussels* 
proposed  new  banana  plan 
Jiate  26;  European  . 
Agrioutture  Council  adopts 
Commission’s  banana  plaa 
Jii^  7:  Barshefsky  asks 
Brittan  to  reconvene  WTO 
panel. 

July  30;  Brittan  replies  to 
Baiehefsky  that  the  EU  sees 
“no  reason”  to  reconvene  ' 
panel 

Sept  25:  G6  requests  EU  to 
acce^  WTO  panri 
Oct  21:  EU  does  notacc^ 


Dec  21:  US  issues  list  of 
European  products  subject  - 
to  increased  US  tariffo. 

1999 

JarK  US  seeks  WTO  backing 
for  sanctions.  WTO  ftxmula 
fails  to  bring  breakthrough. 
PebrBrussels  seeks  WTO 
rulrrrg  on  US  trade  sancticns 
threat 

Man  US  begins  sanctions.  . 
Trade  war  escalates  as  EU 
fights  US  sanctions  move. 
Mar  26:  WTO  calls  meeting 
over  bertana  row 


CONTRACTS  & TENDERS 


US  REACTION  OFFICIALS  HOPE  EU  WILL  DEMONSTRATE  WILLINGNESS  TO  RESPECT  RULES  OF  WORLD  TRADE 


ETBA 

Finance 


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Outcome  seen 
as  opportunity 
for  reform 


Bananalrade  . 

Soufce  of  supply  Id  GU  cuuitiTCS ' 
~1998  ioraies  (ffl)‘  - 
AMa. 

Cariibean  ' ucn 

antfPadfic  AmetiR 


By  Nancy  Outvie' ki  Wulilngton 

Germany,  a land  iff  banaaa 
lovers,  demanded  aod 
receh'ed  a special  dispeosa- 
tion  fram  the  European 
Community  to  be  allowed  to 
import  the  fruit  duty-free. 
But  it  gave  up  that  require- 
meol  under  the  terms  (ri  the 
single  market  in  1982.  That 
was  when  a single  tariff  and 
Ucensmg  regime  was  agTeed, 
and  the  US-European  Union 
banana  due]  began. 

This  week,  when  the  EU 
lost  a World  Trade  Oiganisa- 
tioTT  banana  ruling  for  the 
GRb  time  in  six  years.  US 
oETjclals  were  still  bopiog  the 
EU  would  truly  reform  the 
regime  and  that  US  sane- 
I turns  - to  be  untirHinced  in  a 
I few  days  - would  be  lifted. 

' "The  EU  has  now  yet 
another  opportunity  to  dm- 
onstrate  that  it  is  willing  to 
respect  the  rules  of  world 
trade  and  thereby  bolster 
confidence  In  the  WTO  as  a 
forum  for  redre.ssing  trade 
barriers."  said  Cbaiicne  Bar- 
sbefsky.  VS  trade  represen. 
tative. 

“If  the  EU  does  not  seize 
this  opportumty.  its  commit- 
ment  to  the  multilateral 
trading  sL-stem  must  be  seri- 
ously questioned." 

She  had  nuthlng  to  say 
about  the  US  loss  Iraplidt  in 
the  ruling,  when  the  artritra- 
tion  piinel  also  ruled  that  the 


oDoumssfoio^.  stressed*  pj  \'x  ' I ‘'^  *•!  * . V’ ' ^ 

the  US  would  be.  for-  pnriwaretx  ' / ..  ■ 'Wm 


trade  oDounissfbio^.  stressed 
that  the  US  would  be.  for- 
mally asked  to  lower-its 
request  for  compeosation  - a 
point  tbe  US  had  already 
accepted.  He  said  tbe  EU 
would  continue  its  challenge 
to  Section  301  of  US  trade 
law,  which  is  used  to  bring 
cases  to  the  WTO. 

Prom  the  start,  tbe  EU 
contention  that  tbe  regime 
was  implemented  for  the 
benefit  ^ poor  former  colo- 
nies was  viewed  sceptically 
in  tbe  US.  Until  that  time 
France.  Britain  and  Spain 
bad  adopted  polides  favour- 
ing bananas  from  tbeir  for- 
mer colonies,  while  Ger- 
many preferred  the  bigger 
and  cheaper  bananas  from 
Latin  America. 

“This  is  about  tbe  political 
power  of  domestic  interests, 
who  have  sweetheart  deals 
with  tbeir  suppliers  in  the 
Cartbbean.“  said  Michael 
Samuels,  a former  US  trade 
official,  now  a consultant. 
He  said  even  the  licensing 
regime  bad  benefited  import- 
ers in  France.  Spain.  Britain 
and  Portugalbecausc  they 
could  sell  off  licences  they 
were  sot  using. 

This  crying  over  the  con- 
cerns of  the  poor  Caribbean 


»•  ’ 'Hi  ' r 


Fmce 

Span 

Pdi^ 

Swollen 

iMherfandi 

Austria 

Belgium 

Breere 

Mari 

Otowiarfi  R|@~ 

(retain  ^3^ 

LiReffltxwg  Is 

AtaCK  tey«w  nxwwtato 

Capitol  Hill  and  in  the 
administration,  he  said,  but 
it  had  cut  no  ice  in  Cem>va. 
where  tbe  EU's  position  has 
been  consistently  rejected. 

“Once  again  this  confirms 
that  tbe  US  was  right  all 
along,  trying  to  get  the  BU 
to  make  changes  consistunt 
with  its  obligations.’*  .said  Mr 
Samuels.  ’’Fr.inkly.  there 


' nwigbBSftonB  - GtatcB  SM*.  Raev.  MraaicM.  ftMtawaBD  Mtgri 


This  crying  over  poor  Caribbean 
countries’  concerns  is  a smokescreen' 


trade  body,  then  tbe  General 
Agreement  on  Tariffs  and 
Trade.  Tbe  EU  persisted  in 
dela}ring  and  appealing  and 
even  when  it  said  it  would 
change  its  regime,  the  altep 
ations  were  meaningless, 
according  to  US  trade  offi- 
cials. 

When  tbe  US  said  it  would 
impose  sanctions,  even  \f  it 
was  before  they  were  author- 
ised by  3 WTO  panel,  the  EU 
portrayed  the  US  as  the  out- 
law of  tbe  s>’stem.  trade  offi- 
cials said.  The  US  delay^ 


US  had  exaggerated  the  collection  of  duties 


co6ls  of  the  regime  to  the  US 
economy.  It  gave  iiermission 
for  only  $T9i.4re  in  puniUve 
tariffs  instead  of  the  8520m 
the  US  had  claimed.  But  US 
officials  said  they  bad  woo 
on  points  of  law  and  set  a 
precedent  for  how  sanctions 
could  be  imposed. 

Sir  Leon  Brittan.  the  EU 


countries  is  a 5moke5creen.“ 
be  insisted.  So  was  the  insis- 
tence by  tbe  EU  that  the  US 
only  brou^t  tbe  case  at  tbe 
behest  of  Carl  Lindner  of 
Chiquita  Brands  Interna- 
tion^.  w'ho  gave  donations 
te  both  parties.  These  might 
have  bought  him  support  on 


were  people  in  the  Commis- 
sion wbo  knew  what  they 
did  was  wrong  and  this  sup- 
ports them  as  well," 

Mr  Samuels  was  the  first 
to  advise  Chiquita  Brands 
with  its  sprawling  interests 
in  centrnl  America,  to  bring 
a complaint  to  the  a'orld 


collection  of  duties  until  the 
final  ruling  by  the  arbitra- 
tion panel,  but  tbe  duties 
would  be  backdated  until 
March  3.  the  deadline  for 
WTO  action. 

According  to  lawyers  who 
have  seen  tbe  still-confiden- 
llal  WTO  ruling  by  the  arbi- 
tration panel,  the  report 
explicitly  said  the  US  was 


correct  in  its  ‘mterprelation 
of  WTO  rules,  that  a 
protracted  litigatkm  on  dam- 
ages was  not  necessary 
before  sanctions  could  be 
impesed.  Tbe  ruling  will  also 
enable  the  US  administra- 
tion to  tell  WTO  critics  in 
Congress  that  areals  panels 
will  produce  r^  changes 
within  a reasonable  length 
of  time. 

“It  shows  the  WTO  will 
not  allow  member  countries 
to  skirt  their  agricultural 
trade  obli^diGns  by  engag- 
ing in  endless  litigation,*’ 
said  Senator  Sam  Brown- 
back.  a Kansas  Republican. 

Tbe  Senator  said  he  saw 
“positive  implications"  for 
agricultural  trade  disputes 
DOW  lined  up  for  EU  action. 
These  include  hormone 
treated  beef,  genetically 
modified  organisms  and 
canned  peaches. 


TECHNOLOGY  US  GROUre  TAKE  ADVANTAGE  OF  CHEAPER  LABOUR  COSTS  ABROAD 

More  software  companies  look  overseas 


By  Roger  Taylor  in 
San  Haacisco 


The  speed  at  which  US 
tccbnnlos>’  companies  are 
(noting  soRa-are  operations 
overseas  to  take  adv,mtage 
of  cheaper  labeur  is  hisJi- 
lighted  In'  a new  report  from 
Meta  Group,  tbe  IT  consul- 
tancy. 

Tlie  report  shows  a -to  per 
cent  rise  in  tbe  number  of 
US  companies  establishing 
operations  overecHS.  More 
than  one  in  four  of  the  476 
companies  covered  by  the 
survet-  had  dum.-  so. 


Howard  Rubin,  a research 
fellow  at  Meta  Group,  said 
the  Inoease  in  the  pace  of 
overseas  expansion  refiected 
the  blgber  productivity  of 
non-US  information  technol- 
ogy prof^ionals. 

Tte  US  is  the  second  most 
expensive  market  for  IT 
skills  a^r  Switzerland.  The 
report  found  that  for  every 
one  CIS  programitier,  a cxim- 
pany  coold  esnploy  U Brit- 
isb  prt^rammers.  1.6  Cana- 
dians. five  Rfexteans  or  6.7 
Indians. 

Furthermore,  tbe  report 
found  that  non-US  program- 


mers a*ere  more  productive 
than  their  US  counterpurts, 
producing  16.7  thousand 
lines  of  code  for  every  T.T 
thousand  from  a US  pro- 
grammer. 

Mr  Rubin  sold  the  discrep- 
ancy was  due  in  part 
becauso  most  of  the  more 
Innovative  softu’are  develop- 
ment took  place  in  the  US. 

However,  he  warned  tlvit 
tbe  U$  technology  indiLstr>- 
W3S  becoming  complacent 
because  of  hl^i  demand  for 
its  services  and  shoruige  of 
skilled  labour. 

“The  shortfall  of  cilmt 


makes  technology  profes- 
sionals feel  secure.  But  there 
arc  great  opportunities  for 
US  companies  to  got  better 
value  for  their  money  out- 
side the  US  in  India,  Ireland 
and  the  Caribbean.’’  said  Mr 
Rubin. 

Overall,  the  study  found 
that  US  software  was  of 
highor  quality  than  else- 
where in  the  world,  with 
defect  rates  of  1.64  faults  per 
thousand  lines  of  code  com- 
parod  to  3.85  faults  for 
non-US  softivare. 

However,  that  gap  was 
rapidly  narroK-lng,  with  a 26 


per  cent  unprovement  in  the 
quality  of  non-US  software 
compared  with  a 3 per  cent 
improvement  in  US  soft- 
ware. 

Also,  non-US  companies 
appeared  to  be  getting 
greater  returns  on  their 
information  technology 
Invesunmit. 

Although  they  invested, 
on  average,  23  per  cent  less 
than  US  companies  in  infor- 
mation technology,  income 
and  revenue  growth  associ- 
ated with  these  IT  invest- 
ments did  not  lag  by  tbe 
same  percentage. 


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THE  AMERICAS 


NUCLEAR  SECRETS  REVIEW  OF  US  SECURITY  PROCEDURES  AS  RELEASE  OF  STUDY  IS  SET  AFTER  CHINESE  PM’S  VISIT 


Congress  report  on  N-theft  delayed 


By  Tony  Walkar  and  Steptan 
FkNer  to  WasfnnstDn 

Release  of  a sensitive 
congressional  report  outlin- 
ing Chinese  attempts  to  steal 
US  nuclear  and  other  mili- 
tary secrets  has  been 
delayed  until  after  the  nine- 
day  visit  to  the  US  of  Zhu 
Rongji,  China’s  premier, 
which  ends  late  next  week. 

But  the  Clinton  adminis- 
tration is  continuing  to  step 
up  efforts  to  stop  the  theft  of 
sensitive  information. 

Bill  Richardson,  energy 
secretary,  has  ordered  a halt 


to  the  use  of  computers  at 
three  US  nuclear  weapons 
laboratories  while  a review 
of  security  procedures  is 
undertaken  to  guard  against 
the  lAairing  of  data. 

The  New  York  Times 
reported  that  Mr  Richar^on 
ordered  the  suspension  last 
Friday  of  the  use  of  com- 
puter networks  at  laborato- 
ries in  Calilbmia  and  New 
Mexico. 

There  are  fears  that  these 
networks  are  vulnerable  to 
e^ionage. 

A spokesman  for  Chris 
Cox,  the  Californian  Republi- 


can who  is  chairman  of  the 
committee  on  national  secu- 
re and  mihtary/commercial 
concerns,  said  the  report 
would  he  releesed  before  the 
end  of  April.  Mr  Cox  bad 
been  aiming  for  puhlicatioo 
In  March. 

Committee  staff  and  the 
White  House  have  been 
haggling  over  the  extent  to 
which  material  in  the  sensi- 
tive 700-page  document 
should  be  declassified  for 
pifoUcatioa. 

The  select  committee  was 
formed  after  allegations 
of  improper  fundraising 


for  tbe  Democratic  party's 
1996  presidential  campaign 
involving  Chiaeae  contribu- 
tions. 

Mr  Richardson  said  he 
would  not  allow  tbe  comput- 
ers at  the  Los  Alamos.  San- 
dia  az^  Lawreoce-Livennore 
nationsJ  laboratories,  which 
are  used  for  sophisticated 
weapons  imaging  and  test- 
ing. to  be  re-activated  nnfil 
he  was  satisfied  security  pro- 
cedures were  adequate. 

"Our  computer  security 
has  been  lax.  and  I want  to 
strengthen  it."  he  said.  "I 
want  to  demonstrate  to  Con- 


US  central  bankers  ready 
to  break  with  tradition 


By  Gerard  Baker  in  Warirington 

Economists  have  fretted  for 
some  time  that  the  Federal 
Reserve  may  have  dropped 
the  monetaLi7  policy  ball, 
allowing  the  US  economy  to 
grow  too  fast  for  too  long 
and  stoking  up  an  inevitable 
inllatioDary  e^^losion  in  the 
near  futtire. 

Never  mind  that  inflation 
has  actually  declined  in  the 
last  three  years,  even  as  the 
US  has  enjoyed  record 
growth  and  low  unemploy- 
ment. 

Tbe  Fed’s  critics  say  this 
has  been  the  result  of  a 
series  of  lucky  coincidences 
- a strong  dollar,  lower 
health  insurance  costs  and 
falling  computer  prices 
among  other  things  - that 
will  quickly  pass. 

But  inside  the  Fed  there  is 
little  indication  of  compla- 
cency. Instead,  according  to 
insiders,  tbe  world's  most 
powerful  central  bankem  are 
now  engaged  in  a far-reacb- 
ing  examination  of  the  very 
assumptions  on  which  mone- 
tary policy  has  traditionally 
been  based. 

In  an  interview  with  the 
Financial  Times  this  week, 
Alice  Rivlln,  tbe  central 
bank’s  vice-cbalr.  suggested 
that  traditional  models  that 
say  wage  and  price  inflation 
Inevitably  follow  rapid 


growth  and  low  unemploy- 
ment might  need  to  be 
rebuilt 

Companies'  behaviour 
might  have  changed  so 
much  that  simply  relying  on 
macro-economic  statistics 
and  historical  relationships 
was  no  longer  enough. 

"I  don’t  think  we  have  a 
lot  of  dues,"  she  said,  figur- 
ing out  what  was  htqopening 
would  require  “a  lot  more 
attention  to  what  is  really 


extended  period  of  strong 
economic  growth,  very  low 
rates  of  unemployment  and 
the  absence  of  any  btdld-up 
of  inflation  could  not  be 
explained  in  terms  of  normal 
historical  relationships,"  the 
minutes  said,  but  owed  at 
least  in  p^  to  "more  lasting 
changes  in  economic  rela- 
tionships". 

Ms  RivUn  believes  these 
changes  might  stem  from 
the  important  economic 


M don’t  think  we  have  a lot  of 
clues. . . What  are  businesses 
of  all  sizes  really  doing  in  the 
face  of  these  tight  labour  markets?’ 


going  on  in  businesses  and 
labour  markets.  What  are 
businesses  of  all  sixes  really 
doing  in  the  feee  of  these 
tight  labour  markets?" 

The  answer,  she  and  many 
other  iaflueotial  policy- 
makers think,  might  be 
much  tougher  ^obal  compe- 
tition  ttmt  has  forced  compa- 
nies to  invest  more  in  capital 
and  in  workers.  This  riew 
was  widespread  at  the  r^- 
lar  meeting  of  the  Fed’s  poli- 
cy-setting open  market  com- 
mittee in  February. 

"The  coojundnre  over  an 


shifts  of  the  lag*  . 

corporate  restructuring  in 
the  1960s  and  1990s.  tbe  con- 
fluence of  rapidly  modemi- 
sing  telecommunications 
and  infonnation  teehnolt^ 
systems,  and  the  lower  infla- 
tionary expectations  that 
have  taken  firm  hold  in 
recent  years,  stemming  at 
least  in  part  from  sound  pol- 
icy. 

Alan  Greenspan.  Fed 
chairman,  hag  hinted 
that  he  behaves  somethiug 
really  important  has 
changed.  This  Is  not  to  say 


that  the  Fed  has  become  a 
haven  for  those  who  believe 
the  US  has  shifted  to  a "new 
paradigm"  of  faster  sustain- 
able growth.  The  f^’s  staff 
economists  continue  to  taiir 
in  terms  of  traditioDal  esti- 
mates of  the  potential  rate  of 
growth  of  the  economy  - 
around  per  emit. 

No  one  at  the  Fed  wants  to 
be  heard  saying  the  changes 
are  permanent  Even  some 
of  the  most  fervent  believers 
in  the  idea  of  radical  change 
talk  about  it  in  historicai  , 
terms  - these  are  the 
changes  that  have  occurred  i 
They  might,  of  course,  not , 
last  I 

And  they  all  agree  that  at 
some  point  inflation  will  ' 
pick  op  if  rapid  growth  con- 
tinues. 

But  in  an  example  of  bow 
the  new  OS  economy  may 
have  changed  the  way  tbe 
central  bank  makes  policy, 
many  feel  that  they  can  hap- 
pily afford  to  wait  until 
there  are  much  cleam-  signs 
of  in^tion  before  raising 
interest  rates. 

In  the  past  they  might 
have  raised  rates  in  any 
case,  just  as  insurance 
against  inllatfon.  Now,  in  an 
environment  of  stable  prices, 
many  tbipV  no  real  harm 
will  resolt  if  pc^icy  becomes 
a little  more  reactive  and  a 
htQe  less  pre-emptive. 


grass  and  tbe  American 
people  we  are  serious  about 
upgrading  computer  security 
at  the  labs,  and  there  will 
never  be  another  lapse." 

The  admlnistratioD  has 
been  under  intense  criticism 
over  revelations  that  a scien- 
tist at  the  Lawrence-Liver- 
more  laboratory  In  Calif- 
ornia may  have  passed 
secrets  about  tbe  miniaturi- 
sation  of  nuclear  warheads 
to  China.  Critics  charged 
that  Washington  had 
neglected  warnings  about 
lax  security  at  its  weapons 
laboratories. 


The  Cox  committee  report, 
which  includes  material 
emlmrras&ing  to  the  White 
Honse,  contains  some  37 
recommendations  on 
ftning  security  tx)th  at  weap- 
ons laboratories  and  also 
covering  transfer  of  technol- 
ogy to  China  which  may 
have  a rivflfen  and  mil- 
itary use. 

The  committee  shied  away 
from  investigating  illeg^ 
campaign  contributions  to 
the  Democratic  party  since 
these  investigations  are 
the  subject  of  legal 
action. 


Chavez  test 
for  Congress 


By  Rayimnd  Caiitt  hi  Caiaeas 

Hugo  Cbdvez,  Venezuelan 
president.  yesterday 
returned  economic  and  state 
I reform  legislation  to  Con- 
I gress,  demanding  that  the 
laws  be  redrawn.  The  move 
raises  the  stakes  in  the 
i repeated  clashes  between  the 
two. 

The  government’s  legisla- 
tive proposal,  approved  in 
part  by  Congress  less  than  a 
fortnight  ego,  was  designed 
to  help  finance  a budget  defi- 
cit estimated  at  9 per  cent  of 
gross  domestic  pnodnet  and 
to  overtiaul  a la^ly  crumb- 
ling state  apparatus. 

Yet  Mr  Chavez  said  Con- 
gress had  undermined  his 
proposals  to  eliminate  public 
offices,  renegotiate  the  coun- 
try's foreign  debt,  and  raise 
taxes. 

"We  don't  want  them  to 
put  us  into  a straltjacket.  We 
want  them  to  reconsider,"  he 
admonished  deputies.  The 
tax  legislatioa  approved  by 
Congress  actually  worsened 
public  finances,  the  presi- 
dent said,  suggesting  that 
congressmen  were  defending 
"hidden  interests". 

The  president  challenged 
Congress  by  reminding  rt  at 
his  powers  to  declare  a state 
of  emergency  if  his  reform 
efforts  continued  to  be 
blocked. 

He  also  renewed  threatB  of 


ClUlvei.  ehadengad  Cciiy  as 

moving  towards  tbe  dlssoln- 
tion  of  the  legislature.  ‘Tf 
Congress  doesn't  change  its 
attitude  of  sabotage,  the  con- 
stituent assembly  by  obliga- 
tion will  have  to  dissolve 
Congress  and  TU  be  tbe  first 
to  vote  in  favour  of  " be 
said.  Following  a referen- 
dum on  April  25.  a popularly 
elected  constituent  assembly  ' 
is  sdieduled  to  draw  up  a | 
new  constitution  by  early 
next  year. 

Reactions  in  Congress 
ranged  from  a willingiiesB  to 
reconsider  certain  govern- 
ment proposals  to  accusa- 
tions of  totafitarianism.  He 
does  not  understand  the 
workings  of  dcanocracy.  he 
wants  a blank  cbeqne.''  said 
one  opposition  congresaman. 


NEWS  DIGEST 

OPPMinON  TO  COHCEAIED  WEAPOHB  ■ ; 

Setback  for  gun  lobby  r 
in  Missouri  refeien^unr  : 

have  i»cAs8d  the  canying  of  concealed  weaporo^  pop. 
ular  dOT«nd  for  the  flist  time.  With  virtually  an  votes. 

counted  about  52  per  cent  of  the  state  dector^  vw - 

to  the  measure  - known  as  proposition  B - and 
aboutS  per  cent  In  fevour.  About  1.25m  people  voted. 
Bttie  more  than  a third  of  those  eligibte  but  still  a retford  for 

a local  April  pofl  In  the  state.  ^ 

Ugl^res  in  more  than  40  statos  have  alreedy  passed 
measures  pemiitting  the  cairying  of  concealed  ww>n8. 
But  had  Missourians  backed  proposifiori  B ft  wotdd  have 
been  the  flrel  time  that  canying  concealed  firearms  had  : 
been  authorised  by  popular  demand.  Nikki  Tait,  Chicago 

US  TOBACCO 


industry  suffers  legal  blows 

The  US  tobacco  'mdustiy  has  been  deaft  two  fuitt^  legtf 
blows  after  a CaTifomia  Judge  nited  that  PhlTip  Moiris 
wouldhavetop^$25mofa$51.5mjuiyaward-faF  - 
more  than  ^la^sts  had  eiqaacted  > and  the  Justice  - 
Department  signalled  it  Intended  to  press  ahead  with  a - 
federal  lawsuit 

Analysts  had  thought  that  the  landmark  punitive  dam- 
ages award,  delivered  by  a Caiifomian  jury  two  montfs 
ago  tetd  reduced  lata  on  Tuesday,  would  be  cut  to  less 
lhai$5rn.MaittoF«ldman,tobaccoanalystatScriombn.- 
Smith  Barney,  said:  *71118  is  the  first  time,  afoett  in  a lower 
court  that  an  officer  of  the  lagai  system  has  bleased-such 
a iar^  award  against  the  mdustry.” 

Meanwhile,  David  Ogden,  the  acting  assistant  attmney 
genWal  for  the  Justice  Depatment's  civil  division,  said  that 
the  government  had  entered  into  an  agreement  with  Rob- 
ins, Kaplan,  MHter  and  CiresI  - which  represented  tiie  state 
of  Minnesota  In  its  lawsuit  against  the  industry  last  year  -: 
to  work  on  the  proposed  case  through  to  the  end  of  June. 

The  law  ffam  has  a reputation  for  unrivalled  expertise  In 
tobacco  litigation.  Andrew  Edgec&ffe-Johneon,.New 
York  and  Mark  Sumnan,  Washington 


MEXICAN  ARREST  CAUL 


Former  governor  sought 

The  Mexican  attomey-generaTs  office  has  ordered  the 
capture  of  Mario  Vmanuev^  the  fornierstafo  governor  who 
fled  his  home  state  of  Ouirtiana  Roo,  on  charges  of  orgai- 
ised  crime.  Mexican  authorities  have  requested  tiie  h^  of 
Interr^  in  locking  Mr  Vmanufiwa.  sut^ect  of  a higlv-profile 
drug  investigation  centred  on  the  Yucatan  peninsula. 
Andrea  Mendel-Campbell,  Meidco  Qfy 


On  the  web  today 

e Reinvfgorated  Fujimori  reluctant  to  show  hand  # NY 
laxi  cabs  try  to  beconie  ideal  vehicles  for  advertisers 
e Setback  for  Delta  HI  # Clinton  acts  over  wage  gap 
hUpif/WwwJtxrom/ainericas 


\r0l-' 


W 


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• / 


FINANCIAL  TIMES  THURSDAY  APRIL  8 1 W 


j. 


LINCOLN 


Mercury  ® JAGU 


. ' 


A line-up  like  ihis  isn't  exady  your  ordinary  welcomipg 
committee.  But  then  again  Volvo  definitely  isn  t you^ 

ofdirrary  brand.  Exady  the  reason  je  re  so 

have  ft  os  part  of  the  TdrdMator  Company 
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financial  TIMES  THURSDAY  APRIL  81999 


BRITAIN 


SCOTLAND  J.P.  MORGAN  AND  MSDW  SET  TO  CREATE  1,300  JOBS 


US  banks  planning  big  investments 


PT  Reporters 
to  EcMurgh  and  Looiloii 

J.P.  Morgan,  the  US 
investment  bank,  is  to  open 
a software  engSneering  cen- 
tre In  Scotland  to  develop 
applications  for  Its  trading, 
bind  management  and  bank- 
ing opeiations. 

Tbe  £7.3m  ($llm)  centre 
will  be  located  in  the  centre 
M Glasgow,  and  win  create 
up  to  300  jote. 

Mark  Goughian,  chief 
information  officer  for 
JJ>.  Morgan  in  Europe,  said 
the  bank  had  chosen  Scot- 


land because  it  had  a mature 
rr  infrastructure  and  a rich 
siuiply  of  technology  profes- 
sionals. 

Separately,  Morgan  Stan- 
ley Dean  Witter,  another  US 
investment  banking  group, 
is  today  expected  to 
announce  the  establishment 
of  a call  centre  for  its  Dis- 
cover credit  card  operation 
in  central  Scotland,  creating 
up  to  1,000  jobs.  MSDW 
reused  to  comment  yester- 
day, but  tbe  group  has 
recently  signalled  its  inten- 
tion to  expand  the  Discover 
card  from  the  US.  Discover 


was  originally  laiuiched  in 
the  US  by  the  Sears,  Roe- 
buck retailing  group  and  has 
^wn  rapidly  in  its  home 
market  under  MSDW. 

The  announcements  come 
In  the  midst  of  the  campaign 
for  tbe  first  eiections  to  the 
new  Scottish  parliament 
next  month.  The  ^veming 
Labour  party  will  claim 
today  that  Scotland  must 
remain  part  of  the  UK  to 
benefit  from  big  inward 
investments. 

The  Scottish  National 
party  will  today  be  accused 
of  dishonesty  when  it 


unveils  an  election  mani- 
festo that  falls  to  set  out  a 
fully  costed  reform  pro- 
gramme for  an  independent 
Scotland.  The  SNP,  which  Is 
challenging  Labour  for  con- 
trol of  the  Scottish  parlia- 
ment. wants  to  fight  tbe  May 
6 election  on  its  policies  for  a 
regional  administration 
because  of  a calculation  that 
Scots  all!  vote  for  indepen- 
dence only  in  the  medium  to 
long-tenn. 

Tbe  SNP  leadership  pri- 
vately recognises  tbe  party 
is  vulnerable  when  explain- 
log  its  fiscal  and  monetary 


fx^Ucies  for  independence. 
Gordon  Brown,  the  chancel- 
lor of  tbe  exchequer,  yester^ 
day  claimed  tbe  SNP  wanted 
to  hide  its  plan  for  “an 
expensive  and  messy 
divorce". 

In  a keynote  speech  In 
Glasgow  he  sai±  “Instead  of 
Labour's  virtuous  circle  of 
investment,  jobs  and  reve- 
nues and  better  public  ser- 
vices,  we  would  be  threat- 
ened with  a vicious  circle 
under  the  SMP  of  tax  rises, 
lost  jobs.  lost  revenues  and 
detaining  services." 

Meanwhile,  a senior  Scot- 


Republicans’  rhetoric  leaves  all  parties  confused 


The  formula  on  terrorist  arms  appears  to  be 
unravelling.  John  Murray  Brown  reports 


The  annual  commemora- 
tion of  tbe  1916  Euter 
rebellion  against  British 
rule  in  Ireland  resmiss  a key 
date  in  the  reimblican  calen- 
dar. The  occasion  is  not  usu- 
ally one  for  Sinn  Piln.  the 
political  wing  of  the  Irish 
Republican  Army,  to  sound 
conciliatory,  and  the  tone  of 
last  weekend's  rhetoric  was 
unsurprising. 

Nonetheless,  it  will  be  of 
some  worry  to  tbe  British 
and  Irish  governments  that 
tbe  Sinn  Fdin  leadership 
appears  to  have  denounced 
so  categorically  last  week's 
compromise  proposals  on 
ending  the  impasse  over  ter- 
rorist arnu. 

Government  officials  are 
quick  to  point  out  the  real 
intentions  of  the  republican 
leadership  are  notoriously 
hard  to  read.  In  the  run-up 
to  the  1994  IRA  ceasefire, 
there  were  a number  of 
hardline  statements  suggest- 
ing no  progress  was  likely. 

Tbe  governmnents  believe 
the  fonnula  they  have  out- 
lined allows  both  aides  to 
save  face  - paving  the  way 
for  Sinn  F^in  to  take  its 
seats  in  government  while 
the  Ulster  Unionists  can  say 
the  IRA  has  made  a start  to 
decommission  its  arms. 

But  if  last  weekend’s 
graveside  orations  represent 
tbe  considered  view  of  the 
Sinn  F6in  leadership  then 


the  chances  of  malring  prog- 
ress when  the  parties  recon- 
vene on  Tuesday  look  slim. 
There  is  little  question  of 
grassroots  anger  at  the  dec- 
laration, whicb  calls  on  tbe 
IRA  - and  its  pro-British 
rivals  ' to  “put  some  arms 
beyond  use”  as  part  of  a 
wider  act  of  collective 
remembrance  for  all  the  vic- 
tims of  the  Troubles. 

Even  moderates  appear 
confused,  arguing  that  the 
governments  - particularly 
tlm  Irish  - have  conspired 
with  the  unionists  to  re- 
write last  year’s  multi-party 
peace  accord.  “I  have  been 
over  the  Good  Friday  agree- 
meat  In  detail,  underlining 
bits,  putting  other  bits  in 
brackets,  and  I cannot  find 
anything  that  says  the  IRA 
has  to  decommission.”  says 
John,  a retired  Derry  book- 
maker  and  supporter  of  the 
nationalist  Social  Demo- 
cratic and  Labour  party. 

But  Niall  O'Dowd,  pub- 
lisher of  New  York's  Irish 
Voice  and  a dose  friend  of 
Gerry  Adams,  the  Sinn 
president  yesterday  accused 
the  two  governments  of  “a 
collective  feiltire  to  compre- 
hend the  psychology  of  the 
republican  movement”. 

Republican  sympathisers 
point  to  the  almost  tbeolc^l- 
cal  attachment  of  tbe  IRA  to 
what  is  called  "Ireland's 
physical  force  tradition”. 


:f-L 


Senku-  repufafiewi  Brian  Ksanan:  IRA  has  ‘no  otiOgation  to  disarm' 


which  Mr  Adams  and  the 
leadership  are  trying  to 
move  away  from. 

Uke  Protestant  Orange- 
men and  their  stubborn 
insistence  on  marching 
throt^h  Catholic  areas, 
republicans  dte  tradition  as 
one  reason  why  IRA  guns 


will  not  be  handed  in.  It  has 
never  happened  before,  they 
say,  pointing  out  that  most 
of  tile  parties  in  the  Irish 
parliament  bad  private 
armies  at  one  tinm  but  did 
not  have  to  surrender. 

With  the  onset  of  the 
marching  season,  when  ten- 


sions increase,  the  IRA 
would  be  vulnerable  to 
charges  that  it  had  left  Its 
commuoity  defenceless  in 
tbe  face  of  continuing 
attacks  on  Catholics  by  loy- 
alist extremists. 

Language  is  a perpetual 
source  of  disagreement  in 
Northern  Ireland,  or  the 
NcMth  as  moderate  oation^- 
Ists  call  it,  and  the  six- 
county  statelet  as  republi- 
cans prefer.  And  many 
republicans  say  it  is  hard  to 
reconcile  how  decommission- 
ing can  at  one  and  tbe  same 
time  be  "voluntary”  and  "an 
obligation.”  as  the  declara- 
tion suggests. 

But  there  is  also  a certain 
posttuing  in  the  republican 
position.  According  to  Brian 
i^nan,  a Belfast  republican 
who  is  believed  by  security 
officials  to  be  a senior  mem- 
ber of  the  IRA's  seven-strong 
Army  Council,  the  IRA  did 
not  sign  up  to  the  Good  Fri- 
day agreement  and  therefore 
has  no  obligation  to  disarm. 

But  the  two  governments, 
and  every  other  party  on  tbe 
island,  north  and  south,  has 
long  maintained  that  Sinn 
and  the  IRA  are  inextri- 
cably licked. 

Indeed  Sinn  Pdin  implic- 
itly acknowledges  as  much 
to  accepting  that  without  an 
UtA  ceasefire  - or  all  Sinn 
F9in‘s  electoral  mandate  - 
its  officials  would  not  have 
been  allowed  into  the  talks 
process,  let  alone  into  the 
new  government. 


tlsb  hitRirxwgman  yestteday 
attacked  polfticians  for  being 
obsessed  with  Increasing 
taxes  and  spending  more  on 
public  services  instead  of 
trying  to  impr^  the  pertb^ 
manee  of  existing  services. 

Ewan  Brown,  a direcUw  of 
Noble  Grossart,  a merchant 
bank,  and  t^irman  of 
Lloyds  TSB  Scotland,  said  a 
5 per  cent  effidency  gain  in 
the  public  sector  on  Scotland 
would  yield  £7S0m.  This  was 
more  than  would  be  raised 
by  a 3p  increase  in  income 
tax  in  Scotland,  the  socaXted 
tartan  tax. 

Sinn  Fein 
firm  on 
early  arms 
handover 

Martin  McGuinness.  Sinn 
F6in’s  chief  negotiator,  yes- 
terday rnled  out  any  di^- 
mament  by  the  Irish  R^ub? 
lican  Army  before  a power 
sbaring  executive  was  set  up 
in  the  new  Northern  Ireland 
assembly. 

“Hie  history  of  republican- 
ism and  the  demeanour  of 
republicanism  from  time 
inmemorial  clearly  shows 
that  they  are  not  going  to 
bend  the  knee  to  the 
damanda  of  alemanta  of  tilB 
British  military  establish- 
ment, or  unionism,”  be  told 
BBC  radio  in  Northern 
Ireland. 

If  the  British  and  Irish 
governments  had  changed 
their  view  from  the  Good 
Friday  agreement  of  April 
I99S  - which  made  it  clear 
damwiTniftrinTirng  was  nOt  a 

precondition  for  entry  to  an 
> "then  we  ate  all  in  very 
serious  difficulty”. 

Mr  McGuinness  said  Sinn 
Fein,  tbe  political  wing  of 
the  IRA.  would  join  talks 
next  week  to  try  to  find  a 
cesolutioo.  But  he  added:  “I 
am  working  on  the  basis 
that  there  is  no  prospect 
whatsoever  for  the  IRA  to 
decommission  aniptbing  as  a 
precondition  to  Sinn  FMn's 
participation  in  an  execu- 
tive." 


STATION  SCHEME 


GE  and  BP  Anioco  choseti 
for  $480m  Welsh  scheme 

The  govemmefrt  was  yeaterday  ae«^  rftaar^ 
enarpy  Doficv  to  win  votes  in  ttte  olocnons  to  lhe  - -. 
Welsh  assemb^  by  giwig  the  go^^iead  ^-a  rapOn^  . 
<S483ml  oas-flr^  power  station  schema  in  eoum-Wffl 
&ffiint  are 

Amoco.  Tbe  energy  cWms  to  be  the  fi^  in  1^  world 

to  offer  cwnpante  on-site  power  generation  (ftwct(y«jp- 
plied  at  30  per  cent  off  toe  normal  price. 

Bob  NardeHI,  president  of  GE  Power,  said  toe  Ngfigght 
of  the  project  would  be  its  new  fuel  efficfent  H-system.gas 
turWne,  whidi  toe  company  will  be  hoping  to  vm  further  - 
orders  for.  *We  are  proposing  not  just  aruxther-ga^Ared 
plant  but  toe  system  toat  will  set  standards  around  the-.-. .. 
world  for  performance  efficiency  and  energy  corM  and 
this  site  wilt  serve  as  a show-case  for  toe  world,  be  said, 
The  opposition  Conservative  party  said  the  government 
had  “blown  a hole"  in  its  controversial  strategy  of  severely 
reeutelSng  consents  for  new  gas^flred  power  stdions  to  a . 
bid  to  protect  the  coal  irNiustry.  The  government  ssjd  the 
project  was  eKwnpt  frtNit  toe  nKwatorium  because  it  was 
mu^  less  envIronmerTtalty  damaging  and  would  create.' 
many  jobs,  julletto  Jowit,  Swansea 

INTERNET 


Satellite  system  launched 

Easynet,  an  internet  senrice  provider  with  subscribers  to 
Germany  France  and  the  UK.  has  launched  what  it  claims 
is  the  fkst  commercial  DVB  (digital  video  broadcasting)  - 
satelirte  service  aimed  at  consumers  that  delivers  fast 
internet  access  In  the  UK  for  about  £50  ^80.33)  a monto 
phis  value  added  tax.  Easynet* s service.  Ga^Set,  uses 
British  Tetecommunicatlon’s  broadcast  serrices  tecflities 
and  Eutelsat  satelDtes  to  provide  internet  access  arto  has 
been  launched  after  a year  of  trials. 

Brian  Mulligan,  Easynet*s  msnaging  dkactor,  said.down- 
load  speeds  for  the  service  should  be  “in  excess  oX  those 
currenby  avaOable  fr^  ISON  Rnes.  Ibis  is  the  first  time 
toat  totemet  users  can  receive  web  content  'Aa  sateBke  for 
a fixed  monthly  subscription'’.  Paul  Taylor,  LoiKlon 


DIGITAL  TELEVISION 


$800  sets  to  go  on  sale 

On  Digital,  toe  group  owned  by  two  terrestrial  telsvislon 
companies,  will  today  announce  toat  toe  first  mass-market 
digifel  television  sets  are  to  go  on  sate  aft  about 
(380^.  On  Digital,  which  launched  30  dlgi^  terrestrial 
charmeis  last  November,  vriU  amotsioe  that  Bush  is  to 
start  producing  toe  sets.  It  will  also  announce,  how  marry 
subscribers  it  has  signed  up. 

Until  now.  On  Digital  customers  have  had  to  buy  a £200 
box  which  sits  on  an  ordinary  telavfeion  set  In  order  to 
unecramble  the  digital  signals.  The  Bush  Integrated  digttal 
TV  sets,  however,  are  III^  to  encourage  people  to  sub- 
scribe to  On  Digital  as  they  do  not  require  an  addrtiona) 
piece  of  equipment  Some  manufacturars  have  started 
sefGng  IDTV  sets,  but  ^ eorpense  has  eo  ter  dstemed  con- 
sumers. The  sets  cost  at  least  £600  in  the  UK,  and  can  go 
on  sals  at  up  to  £1200.  Thousands  Of  the  Bush  sets  are  to 
go  on  sale  In  toe  summer.  Catitiy  Newman,  London 


i i « 


Fbrtis  has  again  proved  As  strength  in 
banking.  Irsuranoe  and  investment  Net  profit  for 
1998  was  up  20%  to  GUR  1,564  milHon,  exduding 
extraordinary  resuAs  from  the  sate  of  holdings. 
The  resuHs  of  Generate  Bank  were  inchjded  pro 
forma  in  the  accounts  for  1997.  In  comparison 
wAh  the  profit  published  for  1997,  net  profit  rises 
by  more  toan  95%  if  the  extraordinary  rasuAs  are 
taken  into  account. 


' 


• ’ yii 


— l iitisri  i 


Excelfefit  results 

The  Fbrtis  companies  achieved  strong  organic 
growth  of  17M.  The  insurance  ^oup  performed 
well,  wAh  total  revenue  growth  of  18%.  The  rr^n 
source  of  growth  was  the  sate  of  investment- 
llniced  products.  The  banking  ^oup  perfrxmed 
exoelfentfy;  due  in  particular  to  an  inetease  in 
commission  rncome  and  operations  on  toe 
financial  markets.  This  ted  to  growto  of  17%  m net 

banking  revenurei.  Total  assets  under 
management  increased  15%  to  0JR  245  biliion. 
A strong  performaice  was  also  recorded  in 
bancassurance,  with  commission  income  up  43% 
'nl99e. 

Fortis  nevirer  and  stranger 

In  1998  the  combination  with  Generate  Bank 
and  the  acquisrtjon  of  the  final  stake  in  ASLK- 
CGER  have  made  Fords  one  of  the  largest 
providers  of  finandai  services  in  the  Benelux-  In 
the  United  States  Fbrtis*  position  has  been 
strengthened  by  two  newly-acquired  insurance 
corDpanies,  Pierce  National  Life  insurance  and 
John  Aiden.  Recently,  Fortis  announced  the 
acqrasttion  of  insurance  company  Am&ican 
Bankers  Insurance.  Fortis  has  also  simpfified  its 
structure  and  made  its  two  shares,  Fortis  (Bj  and 
Fbrtis  (NL),  equivalent 

Good  prospects 

Barring  unforeseen  circumstances  arxl 
excluding  the  extraordinary  results  for  1996,  Fortis 
erroects  to  realize  higher  net  profit  again  in  1999. 


J 

V. 


Fortis  in  1998:  More  than  ever  on  the  ball. 


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11 


BRITAIN 


— — FIRST  DATE  CHANGE  RECORDS  SUCCESS 

W „ ,, i~..-,i.,ni..i 

^ales  of  new  cars 
up  sharply  in  March 

Du  


^ John  GriRHhs  in  London 

Sales  of  new  cars  rose 
sbaiDJy  last  month,  the  first 
March  in  which  the  annual 
licence  plate  change  has 
t^en  place.  UntU  lart  yar 
the  change  toofc  place  In 
Aug^t;  it  win  now  happen 
m March  and  September  in 
an  effort  to  make  sales  more 
consistent. 

Statistics  to  be  published 
today  will  show  that  car  r^- 
istrations  rose  in  March  to  at 
least  360,000  - over  half  a$ 
much  again  as  in  March  last 
year  - to  provide  a clear 
indication  that  the  new 
twice-yearly  registration 
plate  letter  ehaTigp  js  poised 
for  success. 

Much  of  the  car  industry 
and  its  dealers  wilZ  also  be 
celebrating  the  results  of 
this  year's  JD  Power/Top 
Gear  car  customer  satisfec- 
tion  study,  also  being  pub- 
lished today,  which  for  the 
first  time  detects  a substan- 
tial and  widespread  rise  in 
service  and  quality  levels 
among  31  car  mgifps 

The  JD  Power  study, 
which  ori^ated  in  the  DS, 
is  taken  with  considerable 


s®rtowsness  by  the  industry 
because  of  the  substantial 
influence  it  is  believed  to^ 
exert  over  buying  patterns. 

Todays  statistics  from  the 
Society  of  Motor  Manufac- 
turers and  Traders  will  show 
that  the  sales  boom  caused 
by  introduction  of  the  “T" 
plate  on  March  1 bad  a dra- 
matic effect,  lifting  total  new 
car  demand  in  the  first  quar- 
ter to  about  3 per  cent  ahead 
of  the  566,829  registrations 
record  in  the  first  three 
months  of  last  year. 

The  March  rise  followed 
the  virtual  coUapse  of  the 
new  car  market  in  January 
and  February,  when  re^stra- 
tlons  were  little  more  than 
half  those  of  the*  comparable 
1998  period.  The  industry's 
contention  that  the  slump 
reflected  buyers  waiting  for 
the  “T"  plate,  rather  than 
fading  consumer  coofid^ioe, 
appears  to  have  been  amply 
vindicated. 

Industry  executives  now 
expect  a smilar  pattern  to 
be  repeated  during  July, 
August  and  September,  as  a 
result  of  the  *Tr  plate  being 
succeeded  by  the  "V"  plate 
on  September  l. 


Economic  cheer 
lessens  chances 
of  cut  in  rate 


By  Christopber  Adam^ 
Ecomnilcs  Staff 

Fresh  evidence  that  the  UR 
economy  is  poised  for  recov- 
ery has  reduced  the  chances 
of  an  interest  rate  cut  today. 

The  latest  monthly  survey 
by  the  Chartered  Institute  of 
Purchasing  and  Sappiy  has 
shown  a surprise  rebound  in 
service  sector  output  last 
month,  suggesting  - that 
recent  monetary  easing  Is 
underpinning  activity. 

Renewed  strength  In  the 
housing  market  and  a last- 
minute  rush : for  personal 
equity  plans  helped  lift 
demand  for  financial 
sendees  in.  Mazdi.  -The  inati.- 
tute's  index  of  overall 
service  sector  activity  rose 
Cronr  a seasonally  adlusted 
49.3  to  S3,  the  first  time  it 
has  climbed  above  the  break- 
even level,  signalling  ezpaa- 
szoQ.  since  September^  . 

The  Bank  of  EnglaDd.  the 
UK  central  bank,  will 
announce  . its  decision  on 
interest  rates  at  noon  local 
time.  Analysts  said  the  case 
for  a reduction  in  the  repo 
rate  from  5.5  per  cent  was 
finely  balanced,  with  the 
monetary  policy  committee 
- which  makes  the  rate  deci- 
sion - likely  to  wti^  signs 
of  a recovery  in  growth 
■-^gainsi  what  IS  stifi  a benign 
outlook  for  inflatioa.. Labour 
market  pressures  are  easily 
and  the  manufactoring 
industry  is  weak. 

■Signs  of  a rdiound  in  the 
services  sector,  which 
accounts  for  two-thirds  of 
gross  domestic  product,  cm- 
tiasted  with  official  figures 
showing  a further  .decline  in 
manufacturing  output 

Manufacturers  cut  produc- 
tion by  0.1  per  cent  in  Febru- 
ary from,  the  previous 
month,  the  Office  for 
National  Statistics  said  y^ 
t«day.  Textiles,  leather  and 
clothing  producers  contin- 


StntesMdite 

Ikteiinttjli  Im  ^ taoBBseki 

teilnewoiiraite  «tt  oos  fflootii  ago 


stmakeribinB 

ned  to  suffer.  The  one  bright 
spot  was  production  of 
mobile  telephones,  which 
soared  on  strong  sales. 

• Spending  on  plastic  cards 
In  tbe  UK  showed  another 
big  Increase  la^  year,  as  the 
tread  away  btan  cash  and 
cheques  continued,  Cbristch 
pber  Brown-Bumes  writes. 
Visa  UK  said  ^tendfing  on  its 
cards  jumped  16  per  cent 
from  £92.4bn  (kl48.8bn)  to 
£l07.‘nm.  The  nusiber  of 
Visa  cards  in  issue  rose  12 
per  cent  to  50L4m,  equivaleat 
to  one  Vte  card  for  every 
adult,  fioropay,  the  Uast^; 
Card  affiliate,  said  spenffing 
on  Us  cards  in  the  UK 
reached  £58bn  and  it  had 
37^  cards  in  issue,  op  34 
per  cent 

Kra  BignaE.  Visa  manag- 
ing dfrectcar,  a^  "There  is 
an  Inexorable  tread  away 
from  cash  and  cheques 
towards  plastic.  Spwidlng  on 
cards  now  accounts  for 
nearly  15  per  cent  of  per- 
sonal ocmsunuition  expendi- 
ture.” 

He  said  that  even  tiiou^ 
tbe  UK  was  Europe’s  most 
developed  payment  card 
market,  600  Visa  cards  an 
hour  wmo  still  being  Issued. 
'Visa's  figures  showed  spend- 
ing on  debit  car^  Thang  14 
per  cent  to  £65Abn. 


Siemens  to  help 
tackle  visa  delays 


^ Rosemanr  Bennett, 
PoOtieal  Cofiespondent 


An  emergehcy  team  of 
government  officials  and 
executives  .from  Siemens 
Business  Services  bas  been 
created  in  an  to 

launch  the  Home  Office 
long  delayed  immigration 
gervice  infcnnatioD  system. 

A ^venunent  official  said 
tba  batik®  of  asylum 
had  grown  to  more  than 
71,000  with  22.000^erseas 
workers  also  caught  to  ^ 
delays.  But  the  large 
of  refugees  due  to  am« 
from  Kosovo  wouli^ot  he 
affected.  “They 
treated  separately,  toe  offi 

Delays  to  the  £T?ta  (112^ 
computer 

the  ininilgratiw  ami 
ality  directorate 

a backlog  of  casrasubmittea 

by  asylum  seekers  and 
p^je  seeking  to  work  m 

^iSf’the  Home  Office 
denied  it  had  con^ 

over  toe  project  or  given  aer 


tpMs  carte  blanche  to  com- 
plete it  at  any  price. 

"Viltoin  the  new  group 
there  is  a separate  group 
which  has  teen  set  up 
purely  to  negotiate  with  Sie- 
mens. Tbia  is  to  make  sure 
. every  time  we  hit  a 
problem  the  work  does  sot 
.have  to  stop  while  we  negoti- 
ate with  the  company,”  a 
Home  Office  said. 

. Previously,  any  actions 
tyiTBTi  to  resolve  problems 
had  to'  be  agreed  mutually 
between  fh&p^es  wito  any. 
financial  or  contractoaJ 
implicatians  ^It  but  in  fiilL 
Last  month,  the  Home 
. Office  was^  rebuked  by  the 
National  Audit  Office  for 
choosing  an  overly-ambi- 
tions  computer  system. 

'The  NAO  said  while  toe 
private  finance  initiative 
-project  would  deliver  cost 
' savings,  toe  taxpayer  would 
suffer  if  the  project  were 
delivered  late.  ITie  report 
Trained  gQvemmmit 
ments  not  to  get  carried 
away  by  the  emthuaasm  of 


Wj 

,L- 

rtfah-" 


The  new  system  is  hc^ 
by  car  makers!  importers 
and  dealers-'to  replace  the 
single  traditional  August 
sales  bulge  with  two  smaller 
and  more  manageable  pealcs. 
In  previous  Augusta,  sales 
typically  have  reached  more 
500,000  units,  swamping 
dealers  with  cars  and  mak- 
ing their  preparation  tor  sale 
H^iy  problematicaL 

The  JD  Power  study  shows 
that  almost  half  iha  brands 
surveyed  achieved  their 
highest  scores  since  the 
study  began,  with  European 
makes  among  the  biggest 
improvers.  The  biggest 
iffiprovanait  was  made  by 
Ford's  Jaguar  offshoot, 
whose  19-point  rise  in  the 
index  took  It  to  second  place 
behind  Subairu  in  the  overall 
level  of  satisfaction  ranked 
by  the  index,  which  is  com- 
piled from  a matrix  of  36 
questions  asked  of  car  own- 
ers. 

The  questions  cover  a 
range  of  criteria,  from  ser- 
vice provided  by  dealers  to 
fundamental  car  quality. 
Skoda,  now  part  of  the 
Volkswagen  group,  ranked 
third. 


Many  routes  still  open  to  investors  in  railways 

Privatisation  ^uld  not  .discourage  those  looking  for  a slice  of  the  UK  network,  says  Sathnam  Sanghera 


Although  .lie  process  of 
priratiting  Britain’s  rail 
network  officially  ended 
more  thw  two  years'ago, 
opportunities  to  invest  in  the 
UK’s  railways  continue  to 
arise. 

Ihere  are  several  different 
avenues  av^Uble  - invest- 
ment in  willing  stock,  tender- 
ing Ibr  national  train  operat- 
ing franchises  when  they 
come  up  for  renewal,  and 
applying  for  Involvement 'in 
the  imTnitiflnt  partial  pti\uti- 
sation  of  the  Lotkion  Under- 
ground rail  aetwoik. 

Althou^  the  last  of  tbe  35 
franchises  that  allow  train 
companies  to  (Operate  on  the 
UR'S  railmys  mily  begu  in 
March  1997,  toe  government 
will  begin  the  process  of 
renewisg  franchises  as  soon 
as  200a  New  companies  wiU 
then  bara  a chaxice  to  em^ 
the  privatised  rail  market, 
wtoch  is  to  teemve  a -govern- 
ment subsidy  of  £l.32bn 
(I2.l3bti)  next  year. 

But  during  tbe  next  two 
years,  it  Is  the  proposed  par- 
tial privatisation  of  the  Lon- 
don Underground  which  will 
take  centre  stage  for  corpo- 
rate investora  looking  for  a 
slice  of  the  UK's  rail  oet. 
work.  Companies  which 
have  already  expressed  an 
interest  in  getting  invcJved 


John  Prescott,  depuiy  premier  (second  Mb,  yesterday  wWt  (Irom 
left)  Sir  Alaststr  Morton,  ^>adew*  strategic  lek  euthority  chairineis 
Tom  vnnsor,  rsA  regteator;  and  Mike  Grant,  new  franchise  chief  PA 


include  Balfour  Beatty. 
Serco.  Kvaerner  and  Bechtel. 

Official  invitations  to  ten- 
der for  involvement  in  tbe 
partial  privatisation  are 
expected  in  the  last  quarter 
of  this  year.  A further  five 
months  will  be  allowed  for 
bids.  Under  the  proposed 
scheme,  companies  wffi  Md 
for  three  separate  conces- 
sions to  manage  sections  of 
the  underground's  track,  sig- 
nalling and  stations  on 
ieases  of  up  to  SO  years. 
Train  services  will  stay  in 
government  hand& 

"The  Underground  is  a 


prestigious  system  and  this 
will  be  one  of  the  largest 
public-private  partnerships 
in  Etirope  over  the  next 
decade.”  said  Tony  Poulter 
of  PriceWaterhouseCoopers, 
financial  advisers  to  the 
project 

“The  rail  sector  is  a 
growth  market,  and  we 
think  many  people  will  see 
these  contracts  as  ones  they 
really  need  to  be  involved  in 
if  th^  want  to  be  serious 
players  in  the  world  of  trans- 
port infrastructure." 

On  a national  level,  tbe 
network-wide  Investment  in 


new  trains  has  been  the  area 
of  highest  recent  activity. 
Orders  placed,  slnee  toe  start 
of  privatisation  stand  at 
more  than  £l.Sbn.  Alto- 
gether, this  will  release 
about  1,700  new  vehicles  on 
to  'the  network  aver  the  next 
three  years,  with  another 
30D,  worth  £500m,  to  follow 
by  2006. 

In  February,  the  Virgin 
Bail  Group,  which  runs  two 
IS-year  franchiaes,  signed  a 
£l.35bn  order  for  the  build- 
ing and  maintenance  of  a 
new  fleet  of  58  stateK>f-the- 
art  tilting  trains.  The  order 
went  to  Alstom,  the 
Anglo-French  rolling  stock 
manutocturar,  worki^  with 
Fiat  Ferroviaria  of  Italy. 

Thameslink,  aontbar  train 
operating  company,  last 
we^  put  forward  plans  to 
order  350  new  trains,  costing 
£i.4bn.  in  return  for  an 
extension  of  its  seven-year 
franchise. 

But  the  offer  of  such 
Investment  is  no  guarantee 
that  Thameslink  will  auto- 
matically have  its  franchise 
extended.  Last  year,  an  ofier 
from  Connex  Rail,  the 
French-owned  train  opera- 
tor, to  invest  £385m  in  new 
trains  and  other  improre- 
ments,  in  return  for  the 
extension  of  its  seven-year 


franchise,  was  rejected 
because  it  ^arovided  insuffi- 
c&ent  value  tor  money  com- 
pared with  tbe  probable  mar- 
ket value  of  the  franchise 
were  it  to  be  offmed  on  ems- 
petitive  tendm  at  expiry  to 
2003. 

Ite  move  was  ^rpical  of 
the  Labour  govenunent’s 
tough  stance  towards  rail 
companies.  Yesterday,  it 
Mike  Grant  - a for- 
mer financial  controller  at 
Eurotunnel,  operator  of  the 
Channel  tunnel  between 
‘Rnpiflnd  and  France  ^ ss  the 

new  frauchisiJig  director, 
with  tbe  hope  that  be  will 
improve  standards. 

The  ^tvenuneat  is  review- 
ing how  franchises  might  be 
re-negetiated  and  awarded  in 
future.  Together  with 
year’s  14  per  cent  fall  in  gov- 
ernment subsidy,  after  this 
year’s  16  per  cent  decline,  it 
looks  as  if  it  may  become 
more  tUfficuIt  for  companies 
in  the  tan  market 

A spokesman  tor  Save  Our 
R^wa^  a pressure  group 
which  is  critical  of  rail  priva- 
tisation. said:  "Regulatory 
obligations  have  not  been 
very  tight  and  [investinaots 
from  outside  the  UK]  have 
genmated  enormous  remnis. 
But  tbe  free  ride  is  coming 
to  an  end.” 


To  Geneva,  of  course.  Its  Private 
Bankers  have  developed  made-to- 
measure  asset  management  into  an  art. 
Unique  investment  expertise  and  a global 


(•(•For  haute  couture 

0 to  Paris. 

And  for  asset 

management  ? 


IH  M 


I 


. y-  ■ 


Geneva's  Private  Bankers 

LIBERTY  • INDEPENDENCE  • RESPONSIBILITY 

perspective  have  established  their  world- 
wide reputation  for  capital  growth... 
a reputation  they  have  ably  defended 
for  200  years. 


BtePIERtCie  - DARIER  HENTSCHiCe 

- tlM*) 


In  Genevas 

LOMBARD  ODlER&Ge  - MIRABAUD&Cie  - PICTET  &Cie 

(1798)  (1819)  0805) 


FINANCIAL  TIMES  THURSDAY  APRl^  ^ 


TECHNOLOGY 


Sorting 


science 
fiction 
from  fact 


In  the  third  of  a 
series  looking  at 
scientilic  regulation, 
Victoria  Griffith 
examines  efforts  to 
cut  fraud 


Science  under 
scniliny 


Tbe  US  government  has 
promised  to  release  a new 
set  of  standards  for  scientific 
misconduct  within  the  next 
few  months.  The  scientific 
commuoit;  is  waiting  with 
bated  breath,  but  should  tbe 
general  public  care? 

Yes.  we  should.  It  has 
taken  a long  time  for  tbe 
White  House  to  get  Its  act 
together  in  dealing  with  sci- 
entific fraud  and  plagiarism. 
Because  other  countries  are 
fiirther  behind,  what  the  US 
does  is  important,  and 
refinement  of  guidelines  to 
root  out  dishonesty  is  some- 
thing to  be  celebrated. 

Tbe  public  could  be  for- 
given for  being  weary  of  sci- 
entific fi^ud  scandals.  After 
all.  the  biggest  ones  of  the 
decade  have  come  to  nought. 
In  1993,  after  four  years  of 
legal  wraagling.  charges 


were  dropped  against  Dr 
Robert  Gedlo,  tbe  Americas 
who  daimed  to  have  discov- 
ered the  HCV  virus. 

Dr  Gallo  bad  been  accused 
of  robbing  both  the  virus 
and  international  recogni- 
tion from  Professor  Luc 
Montagnier  of  the  Pasteur 
Institute  In  Paris. 

While  Dr  Gallo  probably 
should  have  given  credit  to 
Prof  Montagnier  for  senihng 
him  the  \1rus  la  1964,  tbe  US 
courts  eventaaUy  reoc^nised 
that  Prof  Montagnier  could 
not  grow  the  virus  or  prove 
it  caused  Aids.  Dr  Gallo 
could  therefore  Intimately 
lay  claim  to  the  HTV’-Aids 
connection.  Likewise  David 
Baltimore,  a Nobel  prize  win- 
ner. was  exonerate  a few 
years  ago  from  his  alleged 
role  in  using  fabricated  data 
to  show  how  the  body  tailors 
antibodies  to  its  attackers. 

The  government's  failure 
to  prove  its  highest-proffie 
cases  has.  in  fact,  excited 
sympathy  for  those  accused 
of  fraud.  much  easier  to 
make  an  accusation  than  to 
prove  fraud  really  occurred,’' 
says  Boyce  Rensberger, 
director  of  the  Em^t  Sci- 
ence Journalism  feUowsbiis 
at  the  Massachusetts  Insti- 
tute Tedmolo^.  ‘These 
cases  take  a long  time  to  set- 
tle. and  the  innocent  part)’ 


in  the  meantime  will  be 
shunned.  The  falsely 
accused  find  it  difficult  to 
get  work.  In  science,  you’re 
guilty  until  proven  Inno- 
oenL” 

Yet  the  government  can- 
not afiord  to  turn  its  back  on 
cases  of  scientific  miscon- 
duct. While  rare,  fraud  and 
plagiarism  in  the  scientific 
community  does  occur. 
According  to  the  Food  & 
Drug  Administratimi,  up  to 
10  per  cent  of  data  first 
reported  in  tbe  laboratm?  is 
thrown  out  for  unreliabiUty 
at  the  time  of  final  drug 


approval.  Much  of  the  error 
is  accidental,  but  some  of  it 
is  probably  deliberate.  “The 
counterfeiting  of  tbe  US  cur- 
rency is  rare."  says 
C.K.  Gunsalus,  a scientific 
fraud  expert  and  associate 
rice-cbancellor  for  academic 
affairs  at  tbe  University  of 
Illinois.  “Does  that  mean  the 
government  should  ignore 
it?  Of  course  not." 

She  points  out  the  Univer- 
sity of  Illinois  has  just 
sacked  a professor  for  plagla- 
ri^.  The  case  generated  no 
publictCy,  but  shows  offences 
still  occur.  “Just  because  the 


press  doesn't  report  on  it 
doesn't  mean  there  aren’t 
cases  of  fraud  out  there."  she 


says. 

Tbe  nice  thing  about  sci- 
ence is  that  eventually,  mis- 
information is  bound  to  be 
discovered.  Scientists  repeat 
each  others'  experiments. 
Before  a pharmaceutical 
product  makes  it  to  market, 
exhaustive  testing  must  be 
done  both  in  the  laboratory 
and  in  human  beings.  If 
research  is  falsified  early  on, 
it  will  probably  come  to  light 
well  before  a drug  is 
approved  for  sale.  This  may 


'"  i v ' ■ 


* ■ . ■ ■ 


--  ■ 


. . 'i 


explain  why  fraud  at  phar- 
maceutical and  biotechnol- 
ogy companies  is  rarely  a 
problem,  except  when  patent 
disputes  are  involved. 

At  universities,  however, 
n'bere  most  scientific 
research  still  takes  place,  the 
promise  of  government 
money  for  grants,  the  long- 
ing for  recognition  and  the 
ne^  to  secure  one's  idb  all 
combine  to  make  fraud  a 
v^‘  threat 

It  has  taken  the  scientific 
community  some  time  to 
come  to  grips  with  the  issue 
of  fraud.  In  the  cosy  labora- 
tories of  the  post  second 
world  war  era,  scientists 
controlled  their  bebavioor 
through  w'ord-of-mouth. 
Communities  were  so  tight 
tfast  credibility  was  lost  or 
gained  on  personal  reputa- 
tion. As  the  field  of  science 
flourished.  however, 
word-of-mouth  was  not  a sitf- 
fieient  or  reliable  control. 
Yet  not  until  1989.  for 
instance,  were  universities 
receiving  US  federal  grants 
required  to  have  systems  In 
place  to  Identify  and  deal 
' with  ffaud  and  plagiarism. 

Tbe  system  is  still  far  from 
perfect.  Barbara  Mishkin,  a 
Washington-based  attorney 
speciahsing  in  scientific  mis- 
conduct. says  tbe  career  of 
one  of  ber  clients  was 
unfairly  ruined  by  a frivo- 
lous suit  broui^t  under  the 
US’s  “Qoi  Tam"  provisions. 


a law  dating  (torn  the  Ameri- 
can Civil  War  Chat  promises 
the  whistle-blowers  of  fraud 
a large  financial  stake  in  any 
final  settlement.  The  case 
involved  accusations  of  pla- 
^arism  over  research  on  a 
rare  virus.  “We  v>oa  the  case 
on  appeal  in  the  fourth  cir- 
cuit." says  MishkiiL 
*^t  in  the  meantime,  my 


Mf  s much  easier 
to  make  an 
accusation  than 


to  prove  fraud 
really  occurred’ 


client's  career  was  severely 
compromised."  Many  scien- 
tists believe  the  Qui  Tam 
provisions  should  be 
revoked 

Another  problem  is  a lack 
of  protection  for  university 
committee  members  accus- 
ing scientists  of  firaud.  In 
February  this  year,  the  Bay- 
lor College  of  Medicine  in 
Texas  finally  settled  a long, 
costly  battle  with  sacked 
physiologist  ifimoD  Ange- 
lides.  Prof  Angelidies  had 
filed  a dvU  suit  against  Bay- 
lor and  14  indiitiduals  at  the 
university  for  ruining  his 
career. 

The  university  had  found 


that  Prof  Angelides  folsified 
and  fabricated  figures  in  five 
jouraa)  article  and  'five 
grut  appUcationsJ  After  a 
federal  appe^  board  hacked 
Baylor’s  finings.  Prof  Ange- 
lides settied  the  suit  without 
compensation  Tor  himself, 
although  the  university 
agreed  to  pay  Ms  lawyers 
$500,000. 

The  sdmitific  cohununi^ 
and  government  a^  aware 
that  more  work  needs  to  be 
done  to  ^vent -abuses.' both 
in  the  laboratory  and  in  the 
Murts.  New  guidelines  from 
the  White.  Elouse  should  hdp 
define  scientific  misconduct 

The  American  Association 
for  the  Advancement  of  Sci- 
ence has  begun  working 
with  iioivermties  to  encour- 
age mentoring  programmes 
that  ins^  a sense  of  ethics 
fit>m  an  early  age.  Both  the 
government  and  umveraities 
are  getting  better  with  prac- 
tice at  distinguishing  and 
prosecittiog  cases'  of  fraud. 

Internationally,  too,,  tbe 
scientific  community  is  mak- 
ing moves  to  ensure  miscon- 
duct will  be  dealt  with. 
Unesco  has  been  working  on 
a new  set  of  rules  for  the 
publication  of  scientlilc 
results.  After  many,  years  of 
ignoring  the  issue,  govern- 
ments around  tbe  world  are 
beghming  to  face  tile  issue 
of  scientific  misconduct  and 
mucfo  is  to  be  learned  from 
US  successes  and  mistakes. 


M*. vf*  • * 


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'jmtu-. 


I.eave  later. 
Arj*ive  earlier’. 
Stay  longer. 
Horne  sooner. 


Garni  or  an  idea:  Robert  Gallo  was  cleared  of  poadi^  the  tSscovery  of  the  HIV-Aids  conneetion  AP 


CONTRACTS  & TENDERS 


EMSA 


CODICE  91 


gruppo 

WTSiecoM 


they  sim|dy  describe  another  dsfs  work. 

That's  the  veiy  practical  benefit  of  flying  the  n'orld's  fastest  business  aircraft 
You  can  do  things  that  no  one  has  ever  done  before.  And  you  can  do  them  every  day. 

Spend  a lot  less  of  your  business  life  in  the  air.  Accomplish  a lot  more  at  your 
destinations.  And  have  a lot  more  time  to  get  home  before  you  calf  it  a day.  In  other 
words,  meet  time  like  you  do  everything  else  - on  your  own  terms.  And  do  it  with 
remarkable  mission  flexibility  and  fuel  economy. 

?or  more  information  on  the  only  aircraft  that  enables  you  to  do  all  of  tiu  above, 
contaa  Trevor  Esiing,  Cessna  Aircraft  Company;  17  Thatcham  Business  Viflage, 
Cohhrop  Une.  Thatcham,  Berks  RG19  4UV  UJC  Tel:  +44  (0)  1635  873399. 

Fax:  +44  (0)  1635  873322. 


S^»jV,  a company  havini;  ihcir  icei'icnd  o/Itia:  m Via  BcciiTla.  Turin,  and  resiacred  whh  ihe 
Turin  chamlfcT  of  commerce  ubdcr  IK).  IS^SW.joim-yodr  capiial  Lit.  l.lZS.SWpnO-isibB  owner  of 
the  building  -vuioied  in 

ROMA,  Pfana  Saa  Sgvesm  29  Idly  centre) 

Which  emvusu  nf  seven  noon;  *ovc  greiind  plus  two  undnpround  floews.  u jlh  a grow  iToor  urea  of 
laiOu  sq.m.Thc  umhsgrouiid  Ooori  consist  of  eellar  accommodiiu'oi).  siniage.  vtwage  lor  the 
shops  and  ihe  conbul  rooms  iiF  varinus  technological  servioai.  with  a loutl  lliwr  area  of  IWu)  mi  m The 
tauund  IK-e  comkis  trf  shops  isOyom  900  sqjn.)  and  nffiosv  lahoia  630  sq.m.i.  The  remaining  six  /ioim. 
ate  made  up  t»f  offices,  of  which  about  I93»  wjjn.  are  let  and  another  4730  sq.m.  are  currenUv  vacam 
(total  offiuc  nmuge  about  (tMW  sq.m.1.  The  building  has  a wcond  entrance  in  Vb  delta  Mereedic. 


IvMSA  S.pw\.  propOMT  in  sell  rtie  building  ik-scnbed  aN«e  jod  lo  ihi-.  enJ  iiiviie  preiiniinarv 
offeix.  ivliidi  in.iy  uImi  he  e«»nJ«ioiial.  with  a suhsequeni  derinilivc  nlTcr.  subject  in  the  cvpivs’s 
iiihk.-r>ib{hlinp  ihal: 


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meaning  of  amcic  1336  uf  the  Civil  LawCmb: 


lire  prcscni  leviiation  and  receipt  of  any  offers  ihai  may  he  nude  in  lespijnsc  ihaeto  sluit  not  imnlv 
anv  obligaiioa  or  etenmiimem  .m  the  pan  of  EM.SA  lo  alieruie  Uk  buiUin-  to  any  uf  ih;. 
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Itself  and  icspoosibility  for  making  the  necessary  venfications  uid  aseenainmenb  lUaU  nanain  whoJh 
and  exclusively  with  pmspeetive  puiehawts.  who  shall  make  them  m their  own  risk  end  peril 
Inieresinl  parties  shinild  maniiisi  their  inlenst  widiin  20  (twemyi  dijs  of  the  dare  ol  puWieation 
the  present  notice  by  itwans  of  a closed  icgisicred  leiier  bcanng  on  the  ouLwde  both  the  code  number 
of  the  pnacni  noiicc  and  be  diction  •'CONTIENE  OFFERTA  NON  APRIRE"  iCbnuins  olfcr  do  iwi 
cpeti)  atUrewd  iix  Nottiy  Gbneario  Mobh  - Via  Aniene  9 - 00198  Rome 
R)t  further  infonnaiinn  imensicd  ponies  may  eonuict:  EMSA  .S.p,A  . Wu44.|90? 


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financial  TIMES 


THUfeSOAY  APRIL  8 1999 


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technology  insurance 


TECHNOLOGY 


An  online 
policy  to 
improve 


The  advent  of  a 
virtual  exchange  on 
the  net  may  signal  a 
new  era,  says 

Roger  Taylor 

I'Fixianclal  markets 
i-ha've  been  amiwg 
first  to  ben^t  fimn 
the  iatemet’s  potential  to 
create  aear-perfect  markets 
for  everyday  consumer 
items.  The  growth  of 
stock  trading  and  file  onWnB 
mortgage  business  has  dem- 
onstrated the  possibilities. 
But  Uie  insurance  Indnstry  - 
the  largest  single  finatinigQ 
industry  - has  remained 
largely  untouched. 

This  is  surprisixig  because 
insurance  is  among  the  least 
efficient  financial  markets. 
Distribution  costs  are  ^ti- 
mated  to  account  fcv  20  per 
cent  .of  premiums.  Perhaps 
more  than  any  ofiier  indus- 
try, insurance  could  ben^t 
from  the  mtenset 

1%e  problem  is  the  oom- 
plerity  of  insurance  policies. 
7b  compare  all  the  options 
available  and  weigh  price 
against  coverage  would  take 
buyers  far  too  long.  TTiis 
complexity  pushes  up  the 
cost  of  selling  the  product  It 
is  also  the  reason  wl^  Inter- 
net companies  have  been 
loath  to  enter  the'  irdusby, 
preferring  books,  CDs  and 
consumer  electronics 
instead. 

That  could  be  about  to 
change.  Kea  U<dleo,  and  his 
brother  John,  two  internet 
eatrepreneurs  wifii  a back- 
ground in  insurance,  have 
set  up  a company  with  the 
potential  to  bring  tmparal- 
ieled  completion  and  effi- 
ciency to  the  insurance 
iudustiT. 

Cbannelpoint,  based  in 
Colorado,  is  buildiiig  a vir- 
tual insurance  exchange  in 
which  risks  can -be  traded 
with  a remarkable  d^ree  of 
fiexibility. 

This  . prospect  does 
not  immediately  please 


insurance  omnpanies. 
of  what  insurance  oompani^ 
do  - assessiDg  and  -wrTt^g 
risks  - could  be  largely  auto- 
mated by  sophisticated  com- 
puter networks,  reducing 
common  insurance  cover  to  - 
the  most  basic  of  commodi- 
ties. 

ITiis  Is  one  reason  why' 
insurance  companies  have 
not  moved  as  quickly  as 
they  might  have  to  embraee’ 
the  internet.  Uuch  of  the 
Industry  has  done  little  mme 
than  p(^  inlbrmation  about 
products  on  corporate  web 
sites. 

There  are  a- handful  of 
internet  insurance  brokers 
that  allow  you  to  compare 
rates  for  standard  private 
Insurance  products  online. 
But  buyers  still  need  to  con- 
firm tte  jaremium  and  the 
availatdlxty  of  cover  with  the 
company. 

One  company,  Znsw^,  has 
gone  farther.  It  has  created  a 
site  that  allows  you  to  con- 
nect directly  with  a mnwhar 
of  insurance  companies 
where  quotes  can  be 
accepted  online.  But  OarreD 
Tycehnrst,  president  of 
Insweb,  admits  it  was  not 
easy  to  get  insurance  oompe- 
nies  to  woik  with  him. 

Cbannelpoint  is  building 
technology  ceQMble  of  produ- 
(dng  far  more  fundamental 
changes  to  the  insurance 
Indu^ry;  It  has  won  support 
from  some  by  alloi^g 
insurance  companies  to 
manage  their  laesrace  in  the 
planned  virtual  insurance 
market  in'.inach  the  same 
way  as  tb^  would  in  file 
real  insurance  mark^place. 

Many  insurance  compa- 
nies know  that,  long  term, 
the  Internet  is  the  lineal 
medium  for  the  business  car- 
ried on  between  an  insur- 
ance company,  broker  and 
customer.  However,  they 
also  realise  there  are  less 
disruptive  ways  jto  move 
towards  that  pt^t,  and 
Channelpoint  has  made 
itself  loift:.Hke  one  offiie  less 
disnu>five  routes. 


. Mgb  lisk:  Channegioinf  s tedmology  couW  make  It 


fbr  companies  Id  ratine  tiwar  poldee 


Its  project  is  ambitious.  It 
has  set  out  to  build  yirtual 
mod^  of  Insurance  markets 
which  ceydure  eveiy  detaS 
of  the  real  markets,  from  t^ 
. tmms.  of  eadi  insuFanee  pol- 
to  the  way  daims  are 
handled,  to  aspects  of  the 
distribution  and  marketing 

i-h«nr>TiRls 

It  is  starfii^  with  groiq) 
health  poUcies  - the  first 
product  is  launched  *h?s 
week.  Its  model  of  an  Insur- 
ance policy  has  several  thou- 
sand elements,  allowing,  for 
example,  for  168  difierent 
types  of  diabetes-cover 
clause. 

Consumer  can  therefore 
2q>ecify  to  the  smallest  detail 
whadt  they  require  in  a policy 
and  then  find  , the  cheapest 
quote.  Furthermore,,  it 
allows  the  buyer  to  adapt 
market-wide  information 
Into  whatever  format  best 
suits  ttiprn 

Being  able  to  immipulate 
market-wide  information 
about  insurance  in  this  way 
would  put  a powerful  new 
toed  in  the  hands  of  buyers. 
Channelpcuiit.  however,  does 
not  intend  to  put  aD.  this 
infoimafion  dlrastly  into  the 
hazais  the  con^mier.  - 

histaad  it  has  built  a soft- 
ware interface  whidi  other 


organisations  can  use  to  sell 
inairaripg  through  the  WOb. 
These  could  be  existing 
insurance  companies,  banks, 
retailers,  or  internet  compa- 
nies such  as  Ihsweb. 

In  this  way  insurance  com- 
panies can  decide  which 
jHToducts  they  offer  and  at 
what  prices  through  each  of 
the  different  channels.  The 
system,  which  can  be  used 
to  renew  pdicies  aud  handle 
claims,  can  also  be  used  to 
target  difioent  levels  of  ser- 


tts  project  IS 
ambitious.  It  has 
set  out  to  build 
virtual  models  of 
insurance  markets 


vice  to  different  customers. 

Insurance  companies  can 
use  the  system  to  adjust 
their  rates  on  every  other 
aspect  of  a policy  more  eas- 
ily than  they  can  in  the  real 
world.  They  could,  for  exam- 
ple, offer  a rate  ^tecifically 
set  for  married  dmlors  with 
three  Mds  in  New  Yorie. 

.Cbannelpoint's  approach 


has  yet  to  be  tested  in  prac- 
tice, bat  it  is  the  approach 
whidi,  to  fbeoiyat  lea^  has 
the  p^ential  to  produce  a 
significant  improvement  in 
the  efficiency  of  insurance 
distribution  and  to  take 
costs  out  of  the  clatots  han- 
dling. 

IT  successful,  the  effect  on 
the  industry  could  be  dra- 
matic. It  could  lead  to  a mar- 
ket in  which  pClimes  become 
increasingly  broken  down 
into  elements  that  can  be 
bou^t  and  sold  through 
electronic  markets.  Prices 
could  be  quoted  on  individ- 
ual aspects  of  an  insurance 
policy  which  distributors 
could  package  together. 

Insurance  buyers  could 
spedfr  what  level  of  cover 
they  require,  and  then  let 
underwiiters  bid  for  the  pol- 
icy. 

Claim  bandliDg  could  be 
more  easily  outsourced  to 
specialist  groups.  Individuals 
could  put  up  assets  to  under- 
write risks  and  manage  their 
risk  portfolio  just  as  they 
now  manage  their  stock 
portfolio. 

Mr  HoUen  makes  clear 
that  the  conqxany  plans  to 
take  one  step  at  a time. 

But  he  is  confident  that 
the  long^teno  impact  of  the 


tedmology  trill  result  in  the 
end  of  the  traditional  verti- 
cally integrated  insurance 
^mpany,  that  does  every- 
thing from  partidpatiog  in 
vriulesale  reinsurance  mar- 
kets. designing  and  under- 
writ^  a vast  range  of  ivi- 
vate  and  business  insurance 
policies  to  marketing  and 
distributing  these  products. 

It  will  speed  zip  the  move 
to  a “horisontal*  insurance 
industry,  with  some,  for 
example,  aparfaiieiTig’  hi  ana- 
lysing and  underwriting 
risks  and  others  in  packag- 
ing risks  into  policies. 

This  is  not  good  news  for 
the  insurance  industry.  It 
will  lead  to  the  commoditisa- 
tion of  risks  and  is  also 
likely  to  increase  the  level  eg 
%lf-insurance  by  large  com- 
panies, which  would  be  able 
to  assess  their  risk  more 
cleariy.  However,  many  in 
the  industry  see  it  as  ine^ta- 
ble. 

Cbannelpoint  launches  its 
first  product  this  week  - a 
group  health  policy  to  be 
sold  in  the  New  York  area. 

It  is  a big  start  for  the 
company  but  in  comparison 
to  the  long-run  potential  to 
move  the  Insurance  industry 
ten  to  the  internet  it  is  a very 
small  first  step. 


IT  VIEWPOINT  STEVE  FRANCE 


25 


Shaping  up 
for  battle 


TTie  information 
appliance  market 
has  big  potential 
and  two  rival  camps 
are  ey^ng  its  riches 

The  impact  of  the 
internet  continues  to 
grow.  Analysts 
predict  that  by  2002 
there  viin  be  200m 
internet  connectloDS  in  the 
world. 

Intrignin^y.  however, 
according  to  son>e  forecasts, 
about  half  of  new  internet 
connections  will  not  be 
PC-based,  but  will  use  a new 
device  called  an 
‘information  appliance" 
rather  than  a personal 
computer. 

An  informatiou  appliance 
is  any  device  that  can  be 
connected  via  a network 
(such  as  the  internet  or  a 
corporate  network)  to  some 
form  of  information  source 
or  control  function,  ranging 
from  eguipnent  controllers 
in  industrial  plants  to  games 
machines,  screen-pbones  and 
televisions. 

Information  appliance 
markets  are  pot^tially 
acoessiUe  to  consumer 
electranics  companies  and  to 
companies  with  an  IT 
background.  There  is  a 
potential  battle  developing 
for  these  emerging  markets 
between  two  opposing 
camps:  the  traditional 
consumer  electronics 
companies  such  as  Sony  and 
Pltilips,  and  the  more 
bustoess-to-business  oriented 
IT  organisations  sucb  as 
Intel,  Microsoft  and  Sun. 

Both  sides  have  some  of 
the  capaMlities  needed  but 
both  need  to  address  certain 
issues.  The  challenge  is 
likely  to  be  greater  for  the 
consumer  electronics 
companies  because  they 
have  more  at  stake  and  the 
greater  need  to  change.  The 
Issues  indude: 

• Growing  use  of  software 
in  a hardware  world: 
Consumer  electronics 
products  are  predominantly 
hardware  based.  The 
internet  is  changing  fast  and 
consumers  will  be  wary  of 
product  obsolescence.  The 
only  way  to  avert  some  of 
those  fears  is  to  adegit  a 
software-based  ^proach 
that  allows  for  easy 
upgrades. 

• Multi-partner  working 


practices  and  intaDecfnal 

property:  A very  highly 
resourori  companies  may  be 
able  to  keep  up  with  intmuet 
techodogy  and  rdated 

software.  Bto  increasing 
enrppanj|a$  Will  WOlIC  With 
Specialist  paitsos. 

With  thts  will  come  the  issue 
of  who  owns  the  rights  to 
the  products. 

• Rapidly  deereastng 
prodoct  developmmit  time: 
Research  and  devdopment 
functions  are  likelT  to  need 
restructuring  to  handle  both 
reduced  time-to-market  and 
new  ways  ci  worktog  with 
partners. 

The  rr  conmanies  have  . 
financial,  muscle  and 
extensive  experience  of  the 
Internet  and  related  IT 
architectures,  but  they  face 
issues  of  their  own  in 
addressing  these  new 
markets.  These  wiD  include: 

• Market  entry:  Consumer 
riectronics  companies  are 
already  satisfying  the  needs 
of  coiisumers  throu^ 
estaUikbed  distrUmtioii 
channels. 

Althou^  there  is  some 
brand  awareness  and  Icyalty 
to  the  business  market,  it  is 
not  as  important  as  it 
is  to  the  consumer 
electrics  world. 

• Cost  eugineering:  The 
consumer  electronics 
maiketplace  is  much  more 
price-sensitive  than  business 
rr  markets. 

• Dscr  friendliness; 
Sophisticated  eqtopment 
needs  user  interfaces  that 
are  intuitive  and  simple  to 
use.  IT  companies  have  often 
fellen  down  to  this  area. 

• Product  styling:  This  is 
vitally  important  for  product 
differentiation  in  consumer 
markets.  It  is  connected  to 
trends  in  fasbiem,  a cono^t 
less  femiliar  to  IT 
companies. 

If  the  zaarketiDg  forecasts 
are  to  be  believe^  both 
types  of  company  have  a lot 
to  gain  from  an  early 
presence  in  what  are  likely 
to  be  huge  new  markets.  The 
issues  feced  by  consumer 
electronics  and  TT  companies 
are  different,  but 
the  prize  is  the  ^... 

same:  donunance 
of  what  could  be 
one  of  the  ‘ 

world’s  bluest  ' ■ ' 

growth  industries.  •* 

The  mMor  is  a leinapal 
coasuJxttnt  ai  PA  ConsulUnff 
Group. 


TECHNOLOGY  WOWH  WATMNG 


Compound  clue 
to  how  foods 
prevent  cancer 

Why  does  a diet  rich  In  fridt 
and  veg^ables  reduce  the 
riric  of  developing  cancer? - 
Research  carried  out  at  the 
Unfversity  of  Wieconsin- 

Madison  sugge^  tftet  the 
answer  may  fie  in 
compounds  cafied 
fsop^oids. 

There  are  more  than 
22,QCK}  isopr^ioids,  afi  of 
which  are  derived  from  a 
compound  called  mevalonic 
They  regufate 

germination,  growth  and 
flowering,  contributing 

to  toe  distirzefive  flavours 
arzd  fragrances  of  friants- 
The  reeearctoeis 
investigated  two  compounds 
that  eg)pear  to  exert  an 
anti-carcinogenic  effect  by 
^ipprassing  an  enzyme  ai^ 
so  depriving  tumour  cells  of 

toe  chWnical  interrnediates 

toey  need  to  muMply-  "ntey 

loolced  at  garrima- ' 
tocotriawl,  a compound^ 
found  in  cereal  grains  ai^ 
beta-ionone,  a isoprenoki 
found  widely  in  ftuft  and 
vege^les. 

The  study;  which  is 
reported  to  toe  Journal  of 
Ntoftlon,  showed  that 
cancer  ceUs  were  more 
sensitive  to  these 
oompounda  than  norma 
cells,  and  the  two 
cotT^pounds  had  a stronger 
effect  when  combined. 

Vf^versityc^  ■ 

Wfeconstf^Mafeon,  US.  w 
608S621332: 

www.wisc.9du/ 

A scanner  for 
the  battlefield 

The  most  common  c^  of 

death  on  battielWds  Is 

fntsmal  Weeding.  Ofl^^ 
patiait  would  have  a chtfwe 

Sn«»vefytftt»rneeJoal  • 
staff  could  immediately  . 
assess  the  InMos 

techrwiogy  availabto  witWn 

hospitols.  

The  Office  of  Nava! 
nojfrniTh  and  toe  Defense 


Advanced  Research 
Programs  Agency  to  toe  US 
is  sponsoring  the 
development  of  portable 
tecihnetogy  for  treating 
victims  of  war  and  disasters. 
A handh^  ultrasourKi 
scanner  has  been  dev^egzed 
by  a ATL  Ultrasound,  a 
tedtoology  cbmparty,  to 
provide  Images  of  Iritema/ 
organs  and  detect  sites  of 
intamai  Weedng  that  nr^ht 
not  otoerwise  be  apparent 

Offhe  of  Navef  ffoseofc/i- 
as,  te/ 7033960738; 

Artificial  liver 
undeipoes  trials 

Cftokxd  'trfais'are  starting  tor 
the  first  artificial  jfvw'  devica 
that  uses  human  rather  ttiari 
pig  delis. 

ft  is  designed  to  act  as  a 
temporsy  fiver  for  patients 
with  acute  fiver  feitore, 
keeWi^  them  aSve  until  their 
own  fiver  can  recover -or  untfi 
asidtaWe  organ  becomee 
avdiabte  for  transplarTtafiDn. 

Known  as  the  _ • 

Extracorporeal.  Uver.As^  • 

Device  ft  Is  " 

produced  tv  VRaGen  wWdi 
to  based  in  La  JoDa  in 
Cafifomia. 

Several  devices  have  been 
deyeibped  to  perform  this 
role  u^rrg  fiver  cefisfnxn 
pigs.  But  the  use  of  pig  cells 
provoked  concern  about  the 
po^l^Bty  of  spreading  ' 


to  contact  with  mifiions  of  • 
fiver  ceBs,  which  shoidd 
function  as  a normal  fiver. 
The  treated  plasma  to  then 
filtered  and  retuned  to  toe 
.pteiant 

UnrvBfsrly  of  Chicego 
Hospital  US,  te/ 
773702B241:  httpd/ 
tvww,meekenterjiGhjcago  . 
.sot// 

Sealant  to 
plug  pipework 

A sealant  matuiai  toal  - 
automaScafiy  repairs  cracks 
and  leaks  in  pipes  has 
developed  by  German 
nsseuchers.  Theseti-haaPng 
sealant  was  devafcsped  to  . 
tacide-leaks  to  sewer  pipes. 

.1ba  roalant,  devek^ed  at 
the.FTaunhpfsr  Institute  for 
SiviioiViwntel.  Safety  and 
Biergy  Techriology  in  . 
Obertitejsen,  is  mada  of  a 
hydrogel,  a material 
consisting  of  a po^mer 
network  and  water.  When 
tiie  eewer  to'asaend^ed,  toe 
6q^  polymer  compound  to 
poured  over  toe  piire  joints, 
and  hardens  to  minutes. 

Frsur^iokr  UlsSuts: 
Germeny,'iel  2088598121; 
■e-mwlwa^malM.1hg.de 


Exhaustive  route  to 
reducing  pollution 


A nafw  design  for  a ear 
exhaust  system  could 
improve  engine 
performance  and  be 
ftiendDer  to  the 
environment 

A' vehicle's  eixhaiist  ; 
^stem  rediicee  ncMse  and 
controls  picAutant 
emlstewis  trie  the  riloncer 
and  the  cataiylic 
converter.  Butmufffeig  the 
noise  and  GontFolbig 
enris^ons  are  achieved 
or^ataooat 

To  reduce  sound  levels 
toe  sidiaust  flow  pasSM - 
toitruE^  effifteent  dtemetor- 
and.  chambats  which . 
reflect  toe  sound  waves 
back  to  the  engine. 

However,  tooso  changes 
in  flow  moan  flie  an^ne 
has  to  work  harder  to 
expief  toe  exhaust, 
lestriting  in  a loss  of  power 
and  incraaMd  ftiei 
conswnptien. 

Profiasaor  Ahmet 
Sehwnaft,  from  the 
DeptoilnienK  of  Mechanic  . 
Bn^neeringto  The  OMo  - 
State  Urrivaisfly,  has 


coDaboratodwith  workers 
from  Ford  Motor  Comparty 
to  solve  some  of  these 
problems. 

The  team  has  developed 
a coihplBto  eotoaust 
system  that  satisfactorOy 
reduces  noise  wMe 
recovering  eome  of  the 
lost  power. 

mie  several  ptoer 
deMgnsrs,  Prof  SMamet 
cfe«ctsthe  exhaust  gases 
throi^  a wide  chamber. 
This  change  kiifiaineter 
reduces  the  nobe  level. 
However,  the  design 
actaiaHy  guides  toe  gases 
through  tubes  or  nmners 
that  pass  through  the 
centre  of  the  expanwon 
chamber.  Theoniy  contact 
between  toe  gases  in  the 
pipes  and  toe  chamber 
is  through  sntaO 
perforations. 

Atthough  exchange  is 
tindted,  Prof  Setamst  says 
that  the  expansion 
chtenber  atifi  reduces 
eng^  noise. 

*The  rn^cM^  of  tfw 
exhaust  flow  is  retained  in 


ihnvHinnri  oaimn:  itw  tmwiy  rionignofl  wrtiaint  tyrtnm  rniJrt  rnrtiirr  pnihitaiihi 


Amanda  Gtddb 


toe  pipes,  but  because  of 
the  p^orations  the 
oscaiatiorzs  st9i  recognise 
what*s  outrfde  the 
pipe  and  toe  chandler  atfn 
reflects  toe  wovoo 
bade.” 

The  Perforated  Muffler 
Manifdd  Catalyst  (PMMO 
reduces  the  back  pressure 
In  toe  system  by  30  per 
cent,  which  in  turn 
knpnwes  engine  efficiency, 
boioeting  perfbmianoe  by 
3-5  per  cant. 

Thb  may  seam  an 
ins^giHicant  Incroaso,  unffl 
the  targe  number  of  cars 
on  toe  road  e taton  intD 
account 

”tmagine  a few  mOGon 


care  Implementing  such 
improvements^"  says  the 
dosigner.  *When  such  a 
number  is  riHiifiptiod  by  a 
small  percentage,  say  in 
lud  consumption,  It  adds 
up  to  larga  quteitifles.” 

The  PMMC  also 
improves  toe  performanca 
of  toe  catalytic  converter, 
partiedariy  by  reduebig 
the  time  taken  to  roach  its 
operatEng  temperature  d 
about  250^ 

WhBa  toe  catalyst  is  cold 
the  poUutants  pass  stralgfiit 
through.  "Gases  wlQ  warm 
up  the  metai  of  toe  system 
as  weR  as  the  convwter,” 
says  Prof  Sdamet  "The 
longar  the  pipes, 


toe  longer  If  fl  taks^ 

^ teingteg  toe  converter 
dosar  to  the  engine  we 
use  most  of  the  energy 
rather  than  wests  ft 
Iwating  up  the  pipes  when 
statkig  up  toe  engine.” 
This  improved  hooting 
reduced  total  poflutant 
omigaions  by  15  per  cenL 
The  PMMC  is  being 
patented.  Ford  has 
experimented  witti 
variations  of  this  concept 
in  prototype  vehicie 
designs  and  is  considering 
developing  similar 
systems. 

Edwin  Cotyer 


humans.  - . ' • 

The  artificial  fiver  based  OD 
human  celts,  which  is  now 

tested  at  the 
Unhtefalty  of  Chicago 
Hospitals.  Is  designedio 
avoid  these  risks.  Anotii^ 
advantage  Is  that  the  device 

can  be  used  continuously. 
The  fivers  contair^ 

trig  caOs  could  be  used  for  : 
no  more  than  abc.to  ^ght 
bourse^  day. 

. Tite  devktecemsistsora 
tyixi-diaiTfoeied  cartiK^ 

fiUed  with  rnfer  cells,  wWch  Is 

aOBctiedtd1hegrDin.lt 


other  compon^  of  the 

bfo^  and  pumps  it  through 

the  cartridge  Mhare  ft  comes 


Operating  Licence  for 
the  creation  and 
operation  of  a 
health-sector 
database 


Ministry  of  Healtii  ajid  Social  Security 


March  26th  1999 


TTw  Wntetar  of  HmUi  and  Social  Sacurity  in  loeianil  kivites  appScaiton 
fram  partes  wUteg  to  undartato  the  erestlen  and  opeiation.of  a health- 
sector  database  under  the  tenna  of  toe  toalandlc  PaiUamenre  Act  No 
139/1998  on  a hseltowrter  dittnhowo'.  The  appHoaten  to  the  MlnUy  toaB 
contain  detailed  Infonnatton  on  the  areas  of  weilt  and  prcdecta  of  the 
Bppitete^  spedefet  towetedge  to  ihe.fieM  d heato  sdencte  and  flnancM 
ridBy  to  cany  out  the  prajecL  The  appBeant  Shan  BiSQ  submit  ideas  on  project 
ptevteg  are  a desctipllon  Off  lechrteu,  secuidy  end  otganisationai  maters. 

On  toe  bade  of  applicants  iscelyed,  the  Mnistar  rf  Healto  and  Social 
Sscu%  s4l  diooea  re  to  three  partes  Isr  ftutoer  liscustiora  on  toe  pnject, 
and  on  Issue  of  toe  opei^tO  lieanca. 

to  fcaaptog  with  toe  provisions  of  Act  No  139/1888  on  a health  factor 
databan,  ffw  mriiator  of  Hsritti  arid  SeeW  Security  (rrienda  to  issue  Ml 
aperadteg  HeeRte  fte  the  openiton  of  scanbaliaed  database  emtaintog 
noftitersiMulfr^lentifiad  health  data,  which  nwy  be  used  to 
knowtedge,  to  intorova  hearth  and  hearth  care  sendees. 

lAider  toe  tew»  rf  a health  sector  databasw.  thelcwice  b 

eonitasant  uporv  amore  dihw  ittegs,  toe  fotewing  condSons: 


The  databaae  ahal  be  entiraly  tocatad  to  Iceland. 

IMffteai,  seeisily  md  organbailonal  iTiBttWB  ahal  tug  the  requirefmirts 
or  toe  Date  Pittoeten  Conviiisalon  to  tcetond. 

Data  shaB  be  processed  in  such  a way  hat  they  fuM  the  raquimments  or 
haafih  tosttedwis  tor  a dhicai  Wonnaitan  aya^,  and  (fre  they  can  ba 
used  to  scierefie  resaach. 

The  Beensea  ahal  bB  the  ooBis,  toctudng  these  pertaining  to  processing 

I ddafa  tor  ertiyofre  the  database,  are  woritortogd  Its  operations. 


High  standards  of  security  are  teqidied  for  personal  data,  todudittg  e.g. 
enciypSng  of  data,  access  fimilBteiia  arid  strict  rnoriitoting. 

Provision  is  made  that  data  will  be  transferred  to  the  database  from 
medeal  records  at  Icelandto  health  tosdiutens.  and  in  the  keeping  of  self- 
eiTfiloyecl  hedto  wmlcers,  sutajed  to  further  artai^emem  with  the  retsvant 
pai^  The  question  of  howfsr  records  win  be  entered  wi  toe  database 
reworeecfively  Is  dependent  on  factera  todudng  nreotetert  between  toe 
Scensee  ere  toe  health  instituten;  Ns  is  an  totpoi^  factor  to  the  size  of  toe 
datstese,  and  toe  oQst  of  creating  h.  Accordng  te  an  estimate  carried  out  far 
the  Minis^  of  Health  and  Sodal  Seeurlly,  toe  cost  of  ereateg  toe 
codd  be  in  toe  range  of  EUR  129-244  mUon. 

The  Ueensse  is  perTiNllsd  fa  make  use  of  toe  data  born  toe  database  far 

proR;  on  toe  condtions  slated  to  toe  Database  AcL 

An  tofbmiBfion  paefega  on  toe  database  conlatos  cMafM  tofcrmaten  on 
toe  conditions  for  granting  the  Ifaenoe,  seairiiy  ptovtsions  to  ensure 
ptDiacten  of  pererxial  data,  further  tnfnmaiian  on  toe  afniclure  of  toe 
database, and  ether  maters  reiatihg  (0  Its  creation  and  opemOotL 


Tire  Uonnation  Is  BvreaUs  from  the  Ministry  of  Hsatti  and  Scad  8eetitl]b 
Laugavegur  116,  m Reyiqa*to<  mtand  (taet  +954  S5i  wieiS)  from 
April  7th  1989  at  IStOO  hours,  far  a payment  of  EUR  aS7. 


Oueetans  relathig  to  appUesiions  shall  be  eubntittad  in  snMng  to  the 
Ministry  of  Hwlth  and  Social  Seeurlty,  Laugsvsgur  116, 150  Reyfamrlli, 
kafand,  In  a sealed  envelepe,  nartwt  "Questions  - databass”  by  19  April 
i99a.ABquertsawtB  be  wisweied  by  April  23td  1998. 


Applieatians  shall  bs  submitted  to  toe  Mbiistry  of  Hsaltti  and  Serial 
Sseurt^  Lairewtew  11B,  180  Rsyfasvlk.  Icelend.  by  ISriX)  hours  on  AprH 
8Blh  1908,  in  a asalsd  wnrslope  marked  "Database  • appBcalion  for  opsra^ 
deenea."  


fFTT 


B,  <0  sp  B-e  jS  S'  ttGSSS'&gS«9SS.^S  Q C ^ Z 


, .*  .'  •.  •»%’  • .',t.  ^ ' •w..  ^ A. 

:- . • . ■•.  :• : v^,  r 


14 


financial  TIMES  THURSDAY  fl' 


1>*‘ 


■ 

J 

I 


MANAGEMENT 


'••■'’  ‘'V'-'.' -r;:- • 7 


MANAGEMENT  VIEWPOINT  BENEDICT  ROTH 


Risky  models  for  traders 


Embarrassing  losses  during  last  year’s  crisis  in  Russia  show  how  the  systems  that 
banks  use  to  calculate  risk  are  encouraging  increased  exposure  to  extreme  events 


/fi'  How  mucb  do  we 
^ r^y  know  about 
risk?  Banks  deploy 
arnues  of  risk 
N&is"’  experts  and 
phalanxes  of  computeis  to 
keep  their  trading  posMons 
un^  control.  But  their  risk 
deputments  failed  to  av«t 
embarrassing  losses  in  last 
year’s  maiket  corrections. 
Even  J.P.  Morgan,  the 
originator  of  RiskMetrics, 
the  industiy’s  most  widely 
used  risk  modet  had  to  issue 
a profit  warning  in  the  last 
quarter. 

The  International 
Monetary  Fund,  in  a 
post'itaorteni  report  on  the 
correction,  advised  banks  to 
improve  their  risk  xmdels 
and  sharpen  the  prafessional 
judgment  of  th^  experts. 

Sound  judgment  is 
indispensable.  But  what 
about  the  mod^?  Are  they 
a solution  to  the  risk 
problem  or  could  they  make 
the  prtAl^  worse? 

This  mi^  at  first  sound 
odd  - like  the  theory  that 
motorists  with  seat  belts  will 
drive  more  dai^rously  than 
tiiose  without  - but  recent 
theoretical  work  and  market 
observation  suggest  it  is 
true.  Indiscriminate  use  of 
matfaematical  risk 
measuFement  models  can 
encourage  traders  to  behave 
more  dangeroosly. 

Sudi  models  use  historic 
market  data  and  statistical 
teelmiaaes  to  predict,  with  a 
given  (tegree  of  certaio^, 
“value  at  risk”:  the  sixe  of 
the  trading  losses  that  a 
desk  mi^  take.  A value  at 
risk  of  Slffl  at  99  per  cent 
confidence  managers 
and  regulators  that  on  99 


trading  days  out  of  100  the 
desk  should  not  lose  more 
thanfliQ. 

Ihe  i»oblen  Is  that  value 
at  risk  models  say  nothing 
about  the  potential  loss  on 
that  exceptional  lOOth  day. 
But  risk  managers  use  them 
aU  the  same  because  they 
know  from  experience  that 

tradii^  losses  usually  fall 
within  some  normal  range. 
Ihe  desk  with  glm  of  value 
at  nn^  lose  $2m  or 

perhaps  $Sm  on  the  100th 
d^,  but  a loss  of  SlOm 
wmild  be  surprisixig  and  a 
loss  of  SlOQm  would  border 
on  the  impossible 

So  why  should  the  use  of 
such  a model  make  traders 
behave  nave  dangerott^y? 

IVaders  seek  to  maximise 
profit  and  profit  is 
impossible  without  risk, 
risk  is  measured  with  99  per 
cent  /wrisafttiffc,  tradms  will, 
in  theory,  tend  to  increase 
exposure  to  rare  events  - 
events  that  occurred  only 
once  in  100  days  or  less 
often.  And  their  drive  for 
profit  would  lead  to 
erqiosures  of  catastrophic 
pnyortions. 

In  (Xher  weeds,  99  days  out 
of  100  their  profits  and  losses 
would  be  aocqiitable  but  on 
the  crucial  lOQtb  day  they 
would  break  the  bank. 

Chan^ng  the  confidence 
level  of  the  model's 
forecasts,  pwhaps  to  963  per 
cent  or  down  to  95  per  cent, 
would  not  stop  disaster 
striking.  Rather,  it  would 
change  the  frequency  at 
which  disaster  struck.  The 
riskmaneger'a  crudal 
assumption  - that 
excQfional  trading  losses 
still  foil  within  some 


nonna]  range  - is  invalid. 

Although  this  analysis  - 
by  Ton  Vorst  at  Erasmus 
University  in  Rotterdam  - te 
purely  theoretical,  similar 
trends  have  been  observed 
in  practice;  first  in  corporate 
lending  markets,  then  in 
<g»tioQS  and,  most 
interestingly  last  year,  In 
Russia. 

At  the  beginning  of  this 
decade,  corporate  lending 
was  sutgec^  to  what  we 
may  thi^  of  now  as  the  first 
simple  risk  model,  the  Basle 
Oommlttee's  origiofi  capital 
adequacy  standards.  These 
required  banks  to  hold 
capital  equal  to  8 per  cent  of 
their  corporate  lendi^, 
r^surdless  of  the  riskiness  of 
the  borrower. 

R is  now  widely 
acknowledged  that  the  Basle 
standards  encouraged  risky 
loans  to  chase  out  safe  ones. 
It  is  less  widely 
acknowledged  that  recent 
changes  In  the 
permitting  banks  to 
calculate  capital  adequacy 
on  the  basis  of  value  at  risk 
figures,  may  be  having  the 
same  efiect  on  option 
tradii^  portfoUoe. 

Almost  every  finandal 
gngin<MriTig  innovstion  to 
hit  option  books  in  recent 
years  - barrier  options, 
qu antes,  options  on  options, 
credit  d^ult  swaps  - has 
allowed  traders  to  make 
money  on  hedged  portfolios. 
They  have  been  able  to  do  so 
without  inerMsing  their 
exposure  to  noimal  market 
swings  and  therefore 
without  re^stering 
additional  value  at  risk  or 
additional  regulatory  capital 
But  all  these  instruments 


increase  traders'  exposures 
to  extreme  events. 

'Then  came  Russia.  How 
could  western  banks 
wiaintaiTi  exposure  to  Russia 
when  many  economists  and 
even  the  credit  market  itself 
predicted  devaluation  or 
default? 

Consideri^  its  risks, 
investment  in  Rusnan  debt 
mi^t  be  difficult  to 
understand  in  spite  of  the 
attractive  returns.  But  on 
the  basis  of  value  at  risk, 
Russia  was  an  excellent 
investmenL  Defaults  and 
de\‘aluations  are  too  rare  to 
figure  is  value  at  risk 
models  because  these  models 
are  based  only  on  the  recent 
past. 

A portfolio  of  Russian 
debt,  iritta  pxxl  profits  under 
flonnal  conditions  but 
occasional  catastrophic 
losses,  is  a practical  example 
of  the  kind  of  unstable 
trading  book  vdiicfa  Ton 
Vorst’s  research  foresees. 

So  what  is  the  proper  way 
to  r^ulate  how  mut^ 
capit^  hanit*  hold  against 
risk? 

First,  we  should  rect^nise 
that  bank  cajntal  is  held 
against  unexpected  trading 
lasses,  not  expected  ones. 
Models  reflecting  risks  under 
nonnal  market  conditions 
are  inappropriate  for  capital 
adeqtiacy  purpose.  More 
focus  on  rare  events  and 
sensitivity  to  individual 
institutional  circumstances 
is  needed. 

Second,  we  might 
reconsider  the  importance  a[ 
the  “level  playing  field". 
Some  regulators  backed  the 
Basle  Committee's  capital 
standards  to  protect 


depositors.  But  the  most 
important  force  was  the  fear 
in  Europe  and  the  US  of 
competition  from  foreign 
banto  that  might  undercut 
tbe  price  of  loans  by  bolding 
less  capiteL  Capital 
stendaids  based  on  risk 
models  were  a shield  against 
competition  and  were 
adopted  ubiquitously  under 
the  banner  of  the  “level 
playing  field”. 

Standards  designed  to  be 
applied  universally  cannot 
be  sensitive  to  the  qiecial 
ciicunistancea  oC  particular 
institutions.  And  they  are 
insufficiently  subjective  to 
focus  on  rare  events.  They 
will  merely  encourage  the 
concealment  of  trading  risk 
in  ever  more  complicated 
disguises. 

Third-  we  might  encourage 
market  forces  to  play  a 
grater  role  in  regulating 
bank  capital  adequacy.  Most 
hawirc  ndth  Significant 
market  risk  profiles  need  to 
attract  deposits  or  maintain 
credit  relationships  with 
tR^ing  counterparties. 

Given  improved  disclosure 
of  hanks'  policies  and 
practices,  mi^t  not  the 
rating  agencies  and  the 
wbol^ale  credit  market  be 
powerful  enough  to  ensure 
tbeir  prudence 
and  stability? 

Tbe  invisible 
band  is  surely 
more  sensitive 
and  more 
powerful  than  tbe 
i^ulator's. 


2Vu>  author  is  a risk  mattagsr 
at  Rabc^mk  haematiortal  in 
London.  Bis  vietes  are 
personal  He  adaiowledges 
the  kelp  of  colleagues  ax 
Ftatx^xmk  in  developing  the 
ideas  expressed  fdxme 


Woifs  worid:  *W»  see  our  Bvee  as  a aarias  of  Bttla  boMa  that  naad  to  ba  fltod' 

BOOK  REVIEW  MANAGEMENT 


Ga^^llyr^ 


Successful 
is  show  business 


* 


t-"  ' 


*■  '*• 


Christopher  Parkes.  is  entertained- by  the 
argument  that  products  must  be  fun  to 
attract  consumers'  jaded  interest 


Infrastructure  projects  such  as  Kuala  Lumpur 
International  Airport  and  the  Multimedia  Super  Corridor 
are  testament  to  Malaysia’s  vision  of  being  a fully 
developed  country  by  the  year  2020.  Despite  the 
temporary  setback  caused  by  the  economic  crisis, 
Malaysia  is  definitely  on  route  to  achieving  its  goal. 

Ftnd  out  more  about  Malaysia's  TncHTTentum  by  seeirig  the  feature  in  FT  Weekend  section  on  Saturday 


MALAGA 

A)y  lays  a g&x  place  lo  be. 


£ C C N O Y 


M f c fi  ,1  o I J . Wolf 


The  Entertainment 
Economy,  How 
Mega-Media  Forces 
are  Transforming  our 
LJyes  

» 

Times  Book* 


The  idea  that  business  can 
be  fun  has  been  accorded 
much  Itp-servlce  and  coO' 
soled  many  a manager  in 
times  of  stress.  But  the  nag* 
glDg  argument  of  The  Enter- 
tainment Econimg  ~ that 
business  has  to  be  fun  or  it 
will  fail  ^ presents  tbe 
notion  in  an  alto^tber  less 
comforting  light. 

In  this  persuasive  book, 
Michael  Wolf  proposes  that 
in  a world  where  all  prod' 
ucts  are  created  equal,  by 
companies  with  access  to  tbe 
same  tools,  systems,  mao' 
agement  theories  and  out- 
lets, entertainment  content 
is  test  beoomlDg  the  sole  dif- 
fereatiator 

Pun  is  tbe  one  component 
that  will  enable  a product  to 
pass  tbe  jaded  consumer’s 
‘so  wbat?”  test. 

It  is  also  the  factor  witb 
tbe  least  endurance.  "Com- 
panies need  to  provide  enter- 
tainment experiences  that 
engage  consumers.  Once 
th^  have  done  that  today, 
they  must  wake 


business  strategies.  The 
Starwood  hotel  chain  lored 
Richard  Nanula,  Walt  Dis- 
ney's finaTiriat  offlCBT, 
to  be  its  chirf  executive  (bis 
predecessor,  Steve  BoUen- 
bacb,  runs  Ifiltcm)  and  Ddta 
Air  Line’s  new  CFO  is  a 
transplant  from  NBC. ' 

Hatelkeepuig  is  no  longer 
a matter  of  merdy  providing 
bed  and  board.  As  Starwood 
has  recognised,  recreatloa, 
fim  and  com- 

prise the  stock  in  trade  of 
Las  Vegas,  which  is,  in 
essence,  the  world's  Imullng 
bold  complex.  Delta  knows 
that  little  Virgin  Atlantic 
proepere  in  an  envfrooment 
dominated  by  lumbering 
commodity  carriers  because 
a fli^t  with  tbe  British  air^ 
line  is  more  akin  to  a party 
than  a journey. 

Bntertainment  delivers  an 
audience  ' and  an  audieace, 
by  definition,  is  a group  of 
bkendnded  buyers. 

Mr  Wolf  concludes  that 
Just  as  tbe  computer  revolu- 
tioD  made  tbe  position  of 
chief  information  officer 
essential  for  most  compa- 
nies, the  ''entertainmentiza- 
tion”  of  the  economy  is 
doing  tbe  same  for  tbe  post 
of  chief  entertainment  offi- 
cer. 

Tbe  author  has  conjured 
from  a welter  of  aneafotes, 
statistical  evidence  and 
informed  observation  an 
argument  that  will  give  even 
the  most  sceptical  cause  to 
look  at  the  world  in  new 
ways. 

What  is  the  new  Volkswa- 
gen Beetle,  after  all,  but  a 
car  in  a clown-face? 

That  KeyCorp  automated 
teller  machine  uitfa  an 
attractive  woman  on  a full- 

From  vacations 
down,  old 
patterns  of  time 
use  are  being 
supplanted 


; “We  see  our  livtt  the  yaj 
television  executives  Ue 
their  week:  as  a series  of 
little  boxes  that  need  to  be 
fined." 

That  “pld-fiBsluoned  con- 
cept. firee  time”  Is  chopped 
into  chunks  of  varying 
length  - most  Sorter  than 
in  the  past  > each  to  be 
filled,  because  as  nature 
abhors  a vacuum,  scheduler- 
consumers  abhor  an  empty 
time  slot 

From  vacations  down  - 
the  weekend  trip  now 
accounts  for  more  than  half 
of  U8  holidays  - old  patterns 
of  time  use  are  being  sup- 
planted. 

Superimpose  the  popular 
perceptiem  that  people  have 
lees  time  than  ever  for 
themselves,  the  tendemey  to 
do  several  thi^  at  once 
and  tbe  proliferation  of 
entertainment  choices,  and  a 
picture  emerges  of  a world 
filled  witb  "time  surfers" 
and  companies  clamouring 
to  capture  their  attention 
for  even  a few  precious 
seconds. 

"(Tulture,  demogrigAif  and 
technology  are  all  pushiitf 
us  toward  one  goal;  extract- 
ing the  last  dn^  oE  tun  out. 
of  every  experience,"  writes 
Mr  Wolf. 

Retailing,  advertis&ig,  the 
restaurant  trade,  airline 
travel  and  news  broadcast- 
ing have  already  fidlen  to 
the  "entertainmentlzers"- 
Next  comes  the  worigdace. 
Web  snoopers  s?  ps 
cent  of  internet  traffic  from 
offices  and  factories  is  not 
business-related;  15  per  cent 
of  employees  with  internet 
access  have  shopped  on&oe 
while  at  work. 

Is  there  a senior  manager's 
office  out  there  without  a 
television  screen  flickering? 
Not  in  Mr  Wolfs  experience. 

And  even  if  most  are 
tuned  to  tbe  CNBC  business 
channel  or  its  intmsatimsl 
peers,  programmers  whose 
basic  materials  consist  of 
dry  data  have  recognised 
that  they  have  to  be  enter- 
taining if  th^  are  to  com- 
pete in  the  entertainment 
economy. 

Mr  Wolf,  whose  book  is  as 
much  fun  as  tnstruction, 
teUs  a salutary  tale  of  the 


'V 


?£- 

bt” 


fc.i  . 

i:- 

”.3* 


i.'' 


I. 


row  and  think  of  a new  way 
to  do  the  same  thing ..." 

Coming,  from  Mr  Wolf, 
who  established  and  runs 
the  entertainment  practice 
at  tbe  Boox-Ailen  Hamiltoa 
management  consultancy, 
this  nightmare  scenario 
mi^t  be  seen  as  a ploy  to 
drum  up  business. 

After  all,  the  hyperactive 
author  has  already  done  the 
rounds  at  mest  of  the  hand- 
ful of  leading  specialist 
entertainment  companies  in 
the  US,  and  is  os  keen  as  the 
next  how-to  merchant  to 
keep  tbe  fees  coming  in. 

But  as  Mr  Wolf  writes, 
companies  such  as  Ford 
Motor  Company  and  Citi- 
bank came  to  him  uabidden 
looking  tor  -ways  to  incorpo- 
rate entertainment  into  their 


events  between  12.32pm  to 


size  screen  asking  how  much 
cash  you  want  and  offering  a 
quick  round  of  a video  game 
while  you  decide;  Is  it  Just 
an  extravagant  marketing 
ploy  or.  as  tbe  Wolf  thesis 
proposes,  a service  with  real 
added  value? 

To  appreciate  tbe  value  of 
a two-sunute  d^liance  with 
a playful  ATM,  tbe  reader 
must  accept  another  provoc- 
ative Wolilsm:  “In  much  the 
same  way  that  ieaming  to 
think  of  the  wmld  as  round 
rather  than  flat  enabled 
people  to  enviston  new 
avenues  and  opportunities 
. . . our  model  of  time 
has  changed  from  a slow- 
moving  river  to  a highly- 
segmented  grid,"  he 
writes. 


VLuepm  on  March  21  1997. 
when,  in  the  middle  of  an 
uncommonly  heavy  trading 
period,  volume  on  the  New 
York  Stock  Exchange 
crashed  37  per  cent. 

A brief  investigation 
revealed  CNBC  as  tbe  cul- 
prit. It  had  aired  a four- 
minute  feature  on  sex  aztd 
tbe  InterneL 

Rlcfaard  Grasso.  the  NYSE 
chairman,  was  so  rattied  be 
*^dled  Bill  Bolster,  preridmtt 
of  the  network.  "If  you  guys 
nre  ever  going  to  do  some- 
thing like  that  again,  please 
give  me  a up." 

You  have  been  warned. 

7Re  Entertainment  Economy 
is  available  from  FT  Book- 
shop  at  £19.99  by  calling  ^-44 
181  824  SSIl 


I 


■V 


J 


i 


financial  times 


THURSDAY  APRIL  8 1999 


6IHEMA 


V. 


? 


naess 


cSS 


vs  a 


rjfigeT/tadrews  enjoys  John  Travolta’s  switch 
frornj^r-^eiled  cynic  to  inorar  crusadar 


Our  tea  today  is  Baudelaire’s 
. ajnsfaro^  to  his  readers: 
xr^.  leeteur  - mon  smiMalUe  ■> 
^me  filmmakers 
soD^'reco^iise  thro  andienoe 
aS:  ^ther  hypocrites.  .Oue 
itfoiBeBt,  we  don’t  care  at  all 
The  next,  art  ^ 
make.us;  care,  at  least  for  the 
giaa  of  a film,  niav  or  jyfem 
.-;;Si^.at3Qd  up,  please,'  all  those 
.who  • have  ever  . thought  they 
buying,  -leather. 
beca^'Of  what  tanneries  cgh  do 
t^^the  mivironmiMit;  or  stop.nsing 
p^t-strh>per;  or  stop  subscrib- 
hJgrjtp  aoy  of  the  world’s  im 
laSnro.ioxto  poQut^^ 

; yoii;,ajg  r thot^fat:  Ygi 

Wfertratdx  Ai^afi^'atcflBaw;  aii  ec6-  ' 

lea^^.cttin  Chith-based  lapai 
drjgma,s^d  get  all  steamed  up 
iuiaai'^^fic'wa  We  hiss  the 
oc^Idnii^tes  who  poison  the 
laisdl  .dhd.-we  <heer  the  personal, 
iciituies.  lawyer  .(,tohn  'Travolta) 
who'^ds  his  soul  by  throwing' 
his*  inott^' after  a good  cause. 
Wa^e.  Jiis  fim  ^ges  towards  . 
bahkraptcy,'  *Jan  ScfaKpTifma«v> 
(iaicttml  naiue,  actnal  n^}  fol- 
the  nioricy,  costly- frc^ 
e-.-ciifiter  -of  leuteiemia cl^d 
dttfhs  in  a New  Rngign^  tg^'tp 
aibKwe-pf  higcompany  poUiitei^i 
IE  this  hero  wore  a has^han  cap 
smdtQrty  anorak,  he  would  be  TV 
crusa^  Michael  Moore.  Instead 
he  .wears  Annani,  or  closest 
eqnivalsnt,  and  is  played  by  Tra> 
v^ta  vrith  the  hair  gel  left  over 
from  Get  Shorty.  He  is  so  repel' 
lent  initially  - *1  can  appreciate 
the  theatrical  value  of  sevei^ 
dead  kids,”  he  declaims  with  an 
ambulance'Chaser’s  dismissive 
cynicism  - that  he  almost  has  to 
undergo  conversion.  So  after  vis- 
iting Woobum.  Massachusetts,  to 
ten  the  parents  to  stop  bothering 
him,  be  muses:  what  if  it  isn't 
a little,  no-money  case  fas  first 
seems)  but  a David  'versus  Goli- 
ath fight?  And  whatever  it  ia, 


shouldn't  justice  be  done! 

The  fibngoer  muses  coxrecUy: 
this  must  be  a Robert  Hedford 
:P^uctlon.  The  Sundance  Eco- 
Ejd  has  a flair  fbr  wainwg  cqi> 
^onsness-raising  commercial 
fihns  and  In  Steven  Zatnian  ^ho 
setipted  SehmtOer'^  Ust,  he  has 
found  a writer-director  who 
“makes.a  terrific  fist  - raised  and 
brandished  - oiit'of  Jonathan 
HaiYs  bestselling  book  about  a 
case  that  ended  in  defeat  fe»:  both 
hero  and  villaiuU).  This  lawyer 

A Cwi.  ACTioN  

Steven  ZaiH^n 

Fran^  Sraiid  . . 

Him  ART  ■ ■* 

Usa  Choiodenkp 

Sdr56^  mi' mm  

Rosetroche 

\**s  . '•  * 

■■ 

MareLewte 


aaMaBMa«Ma 


did  lose  his  money  and  firm.  The 
giants  toetr  finally  humiliated, 
tbou^  in  an  appeal-case  post- 
cript  rather  than  the  Sctaiicbt- 
mann  showdown. 

ZaiOian's  trick  is  to  diop 
the  narrative.  He  keeps  cleverly 
intercutting  a scene  in  which 
Something  Important  happens 
with  a later  scene  in  which  it  is 
reported  or  post-mortem'd. 

So,  as  wen  as  watching  Tra- 
volta horse  trade  with  the  enemy 
lawyers,  led  by  Robert  Duvall,  or 
parry  the  f^yching  techniques  of 
a company  CEO  ^ cameo  fiom 
directOT  Sydoey  FoDac^,  we  bear 
and  see  the  ajghast  or  qulszical 
reactions  of  his  coDeagues.  This 
device  amplifies  and  contextu- 


★ 


THE  ARTS 


'A  CM  AcSon*:  Robert  DinM  OsfQ  and  John  TrawoH^  a skBed  doiMe  act  of  legal  taxes 


ahses  each  step-in  a complex 
story.  . 

At  the  movie's  heart  is  a con- 
flict between  justice  and  money. 
The  parents  want  a public  apot- 
ogy,  Schlichtmann-Travolta 
wants  a giant  payout.  So  truth 
and  honour  find  the  perfect  crack 
to  fan  tbrou^  given  an  extra 
push  by  Duvall’s  foxy  old-timer 
whose  great  trick  is  pretendmg  to 
be  Mr  Has-B^n. 

Whether  ^llotaping  his  bat- 
tered briefcase  or  bonncing  a 
wmn  baseban  on  the.  law-courts 
wall,  Duvall  is  riveting:  Even 
Travolta’s  skilled  performance 
has  to  back  against  the  scenery. 
ratrhing  the  knocks:  Duvall  won 
an  Oscar  somination  for  this 


deceiving  old  rogue  who  would 
sure^,  to  return  to  our  origins, 
have  delighted  Baudelaire.  Bypo- 
aite  acooat,  - mon  semblable,  - 
mon  ^ire! 

* 

TTw  Red  VioHn  Is  a Euro-pudding 
made  by  a Canadiap:  no  ethnic 
cleansing,  praise  be,  in  canema. 
Francois  Girard  follows  bis  38 
Short  FUms  About  Gtem  Gould, 
that  concisely,  dazzling  theme- 
with-variations  on  musical 
genius,  with  this  beguil^  multi- 
story fable  about  a violin  handed 
down  through  centuries. 

An  itahan  instrument  bsq^tised 
with  a dead  wife’s  Uood  passes 
on  to  a tomderkind  Austrian 
orphan  in  1793,  thence  to  an  18906 


English  virtuoso  (Jiason  Flemyn^ 
entwined  with  a beautifhl  writer 
(Greta  Scacchi).  thence  to  Chi- 
na’s Cultural  Revolution,  finally 
to  a New  York  auction  room 
stalked  by  Samuel  L.  Jackson, 
who  is  to  priceless  violins  what 
Bluebeard  was  to  wives. 

Eac±.  country  speaks  its  own 
language,  so  prepare  for  subti- 
tle And  each  story  has  a teasiDg 
allegorical  reverb,  so  prepare  for 
mental  exercise.  (Free  clue:  the 
En^sh  episode  is  about  the 
Devil.)  The  film  has  all  the  faults 
of  a Enro-pud:  too  much  ’ll  it’s 
Tuesday  it  must  be  medieval 
Italy",  too  much  can-we-bonrow- 
your-lij^ting-crew  variable  col- 
our photography.  But  the  violin 


catches  us  up  as  a multi-function 
symbol  of  art  or  the  heart  or 
human  feeling  in  general  at  its 
highest  stringiiig  and  pitch. 

Which  brings  by  helpbd  porta- 
mento to  Bigh  Art.  With  Bedr 
rooms  and  Balbotms  this  Ameri- 
can lesbian  love  story  makes  a 
brace  of  gay  tales  this  week.  The 
first  has  Ally  Sbeedy.  ex-brat- 
packer  of  The  Breaf^ast  Club  and 
About  Last  Night,  gauntly  falling 
for  magazine  assistant  Rbada 
ffitcbdl,  who  becomes  her  muse, 
model  and  editor. 

Sbesdy's  dropont  {AiMograpber 
is  trying  to  dr^  back  in,  though 
handicapped  by  a borne  life  that 
seems  to  involve  giving  flat-space 
to  an  army  of  friends  wanting  to 


< 

4 


15 


use  their  noses  as  vacuum  dean- 
ers.  To  »y»gire  matters  quirkier, 
Shay’s  lover  is  an  ex-Fassbin- 
d^  actress  (Patricia  Clarkson) 
with  a heavy  (German  atxsat  and 
heavier  cocaine  habit 

The  drug  culture  amMaoce  and 
wiagawne  ebit'Cbat  - favoorite 
adjectives  are  “intense"  and 
"cerebral"  ihvoarite  name-drops 
are  Dostoevsky  and  Barthes  - are 
both  camper  than  the  gay  love 
somes.  These  push  the  film  dan- 
gerously towards  seriousness, 
even  sensiti'vlty.  Acutely  acted, 
especially  by  the  newer  leaner 
Sbeedy,  they  prove  that  gay  erot- 
idsm  in  cinema  can  wholly 
bypass  pomograpl^  to  find  the 
heart  and  mind. 

Bedrooms  and  Ballwc^s,  by 
comparl^,  is  a Britidi  sham- 
bles. though  also  directed  by  an 
American  woman:  Rose  Troche  of 
the  spry  lesbian  agit-cmoedy  Go 
Fish.  Troche  seems  out  her 
depth,  or  rather  grounded  in 
shallows,  in  this  Netting  Hill 
roundelay.  The  film  resembles  a 
gay  verskm  of  This  Year^  Looe, 
even  to  having  Jennifer  Ehle 
reprise  her  “this  year’s  Meryl 
Streep"  act 

A loves  B loves  C loves  D until 
the  audience,  slipping  towards 
coma,  goes  “Zzz".  Robert  Farrar’s 
script  fails  to  convert  flippancy 
to  wit  and  the  actors,  from 
youngsters  Kevin  MdUdd.  Tom 
Hollander  and  Jamm  Purdoy  to 
old  hands  Simon  Callow  and  Har- 
riet Walter,  seem  to  be  respond- 
ing to  prompt-cards  saying  “Mug 
harder”.  At  least  as  with  Bigh 
Art,  we  can  applaud  the  visual 
frankness.  Never  in  a single  week 
have  British  screens  welcomed  so 
much  same-sex  deep  kissing. 

Siam  suffers  from  aesthetic 
whiplash.  The  Washington  DC- 
set  tale  of  a black  rapster-poet 
(Saul  Williams)  jailed  on  drugs 
charges  but  bailed  in  time  to 
have  his  soul  saved  by  a poet- 
teacher  (SonJa  Sohn),  lurches 
from  realism  to  sermon  via  melo- 
drama. Fine  moments,  and  fine 
acting,  may  explain  the  movie’s 
booty  of  festival  prizes.  But  so 
may  its  determination  to  be  all 
films  to  all  judges. 

Robert  Lepage’s  Nd  and  Trey 
Parker’s  Or^ismo  are  sin^e-word 
titles  needing  scarcely  longer 
reviews.  The  first  is  a don’t- 
bother  French  Canadian  collage 
about  love  and  terrorism.  The 
second  is  a don't-evan-tbJnk- 
about-U  satire  on  the  pom  indus- 
try from  the  gone-to-better-things 
creator  of  TV's  South  Park. 


»5 


How  to  fit  22  Abba 
songs  into  a hit  musical 


TH^TC  

ManamiMhl 

Prtnoe  Ednard  Ybeaba,  Londoa 

Even  between  consenting  adults, 
there  are  certain  predilections  to 
whfeh  one  does  qot  lii^tly  con- 
fess. In  my  case,  a fondness  for 
Shirley  Tenyde’s  movies  is  one 
gufb-  Mow  it  is  joined  - herewith 
vanishes  my  social  life  - Iv  the 
fact  that  I actually  enjoyed 
Nkonma  Mia!,  the  new  musical 
based  on  the  Abba  songs  of  the 
1970s.  People  have  been  ostra- 
cised for  less,  and  many  of  my 
heretofore  dearest  friends  will 
now  race  to  be.  tbe  first  to  cast 
stones  at  me: 

Still,  the  charm  of  Mamma 
is  'not  inconriderable.  Not 
Xaa^  the  music,  which  has  an 
effusive  innocence  and  open- 
hearted  exuberance  almost 
ortrnrt  in  the  modem  murical 
Real  pop  music  of  this  sort  is  so 
Tmyih  jQore  appealing,  so  mudh 
iflsa  pretentious,  so  much  more 
snitable  for  infectious  theatrical 
entertflinmeat  than  the  tawdry 


bombast  of  most  'IJoyd  Webber 
and  all  Boublil-Schonberg. 
Abba’s  nmsic  Cairtsic  and  lyrics  . 
by  Beany  Andersson  and  Rjfim 
tHwieus)  has  cmtainly  beem  ovm^ 
rate^  but-  r and  I speak  as  bite 
who  turned  away  frem  pop  music 
in . my  early  teens  in  1970  - 
Mamma  Wal  proves  that  Abba 
have  been  undorated,  too.  Son^ 
TfaB  “Danexog  Queen*^  atwi  ^juat 
One  Look"  burst  upon  your 
sens^  sweet  , and  xnstently  sen- 
gatjftnal 

"We  are  past  the  era  of  ixonis- 
ing  about  Ahb^”  someone  ssdd  to 
me  on  press  ni^rt.  Oh  yeah?  Tte 
show's  makers  irouise  about 
these  Abba  songs  vigtit,  feft  and 
centre.  Every  other  time  a ebar^ 
acter  starts  to.  mng  one  of  tbe 
famous  numb^  the.tfming  is  so 
shameless  that  tbe  audience 
chortles.  But  not  for  kmg.  Even 
when  the  staging  goes  delibw- 
atety  retro  and  evofc»  Abba's  old 
ebstmnes  a Big'Nnm- 

ber  but  ^ sosnethizig  like  feay) 
“Super  imupear",  soanietMng-Mg 
and  simple  rises  throu^  the 
thick  fabric  of  the  music  and 
transcends  the  archness  and 
eampness  of  fife  situation. 


So  what  if  these  songs  weren’t 
written  for  a musical?  There’s 
plmity  of  precedent  for  takhig  the 
fait  son^  one  group  (or 
and  stringing  a st^  show 
around  them.  Elvis  Fresl^  and 
the  Bettes,  squeezed  their  hits 
into  iheir  pop-musical  movies; 
and  in  19T3,  the  choreographer 
Twyla  Tharp  made  a sensation 
-with  her  Beach  Boys  ballet  Deane 
Coupe  (vrtddk  she  wmn  on  reviv- 
ing, most  sooeessfiiny,  into  the 
1090s).  The  notion  that  songs 
shouM  he  written  to  a dramatic 
context  has  caused,  since  1942 
'and  Ofdahamal,  the  gradual 
imiTuifcing  of  the  musical  in  musi- 
cal tezms.  Shows  like  Mamma 
^a!,  by  putting  their  potorities 
on  the.  music,  are  reveising  the 
grim  trend  of  the  last  SO  years. 

And  Afaimna  Mtob  plot? 
everybody's  surprise,  there  is 
loads  of  it.  It's  coloor-blind, 
hunk-snsceptlble  and  gay- 
fiietufiy.  Three  dads  and  a wed- 
dh^  Part  of  ihe  ftm  toms  out  to 
be  the  sheer  susp«ise  of  finding 
how  on  earth  23  Abba  songs  can 
fit  into  all  this;  but  nine  oat  of  10 
do.  Catherfaie  Jtdmtox  has  giveo 
tin  story  Just  enongfai  emotional 


depth  and  drazoatic  variety  to 
hold  the  attention,  and  Jnst 
enough  tran^iarency  to  suit  the 
songs.  And,  yes.  irony.  Admit- 
tedly, the  most  ^uberant  occur 
hz  Act  One;  and  Act  Two  ends 
very  low-tey.  Bat  then,  like  Sat- 
urday  Peoer,  when  tbe  plot 
is  over,  tbe  show  enters  its  own. 
iSTOs  pop  oirvaita  and  explode 
into  one  hit  reprise  after  anotiier. 

As  for  the  staging,  its  best  fea- 
tures are  Mack  Tbompsonb  sim- 
ple and  flexible  sets,  and  the  cen- 
tral performance  of  Siobh&n 
McOartby  as  Donna,  bringing  tbe 
same  ardent  naturalness  to  both 
singing  and  her  role.  Pfayllida 
Lloyd's  direction  often  makes  too 
HttiP  of  both  tbe  music  and  the 
large  stage  (there  are  several 
musically  inefiectual  exits  and 
entrances,  for  example,  and  sev- 
eral scenes  are  scal^  as  if  to  a 
space  more  intimate  than  the  big 
.Prince  Edward);  Howard  Har- 
rison's hating  could  make  sev- 
eral scenes  more  telling  than 
they  are;  and  Hilton  McRae  is 
underpowered  as  one  of  Sophie^; 
tbm  potential  dads. 

. StiH  Uto^d  and  her  choreogra- 
pher, Aotiiony  van  Laast,  elicit 
genmtdly  good  performances  all 
round.  Jenziy  Galloway  and 
Titutae  Plowright'  make  much  of 
their  rales  as  Donna’s  did  giri- 
friends.  You  shouldn’t  take 
Mamma  Mia!  seriously  which  is 
precisely  why  It  proves  to  be  one 
of  the  few  musicals  00  the 
London  stage  today. 


CONCERTS  BARBICAN/ROYAL  ALBERT  HALL 

Good  luck  strikes  twice 


Once  the  reviews  of  the  first 
night  have  appeared,  a visit  to 
the  opera  can  be  a predictable 
oocasioo.  'Those  with  a pendiant 
for  the  unexpected  are  much  bet- 
ter off  going  to  a conceit,  where 
there  is  no  tellito  when  good 
luck  mi^t  strUm. 

Contrary  to  tiie  law  of  proba- 
bility, it  struck  twice  in  London 
just  before  and  after  Easter. 
Tuesday  night  had  been  planned 
as  one  of  the  b^  evente  at  the 
Barbican  this  spring:  a pro- 
gramme of  solemn  Bach  cantatas, 
taken  out  of  the  Church  and 
tiniqiiely  given  a ftiUy  stsq^  out- 
ing by  Peter  Sellars,  the  Ameri- 
can director  regarded  by  some 
conservative  opera-goers  as  the 
nearest  thing  to  the  devil 

Sadly,  it  did  not  happen.  The 
intend^  sdio  singer  was  unable 
to  appear  and  her  replacement, 
tbe  French  contralto  Nathalie 
Stutzmann,  apparently  did  not 
fancy  trying  her  ha^  at  the 
meaningful  slow-motion  sema- 
phore gesturing  that  has  been  a 
feature  of  Sdlars’s  previous  stag- 
ing of  Baroque  music  - who  can 
blame  fa^ 

Instead,  we  had  straightfor- 
ward 'concert  performances  of 
two  of  Bach’s  best-known  solo 


cantatas  - VergnSgte  RRJt  and 
fcA  habe  geaug  - interspersed 
with  instrumental  concertos  by 
Bach  and  Corelli.  Flaying  with- 
out a conductor,  the  Orchestra  of 
the  Age  of  Enlightenznent  did 
what  early  music  groups  invari- 
ably do  best,  making  music  like  a 
chamber  group  in  which  every 
player  is  an  equal. 

Stutzmann.  azi  infrequent  vis- 
itor to  London,  sang  simply  and 
with  dignity,  in  her  song  record- 
ings the  voice  can  be  discourag- 
ing, altematizig  between  a thick 
wobble  and  a vibrato-less  boot; 
but  aided  by  a sympathetic 
orchestral  accompaniment,  it 
sounded  more  evenly  product 
and  easily  flowing  here.  The 
bushed  repi^  of  Sehlummert 
etn,  the  slow  movmnent  of  Ich 
habe  genug,  was  particularly 
lovely.  Far  fimn  misring  Sellais’s 
staging,  most  people  were  proba- 
bly gl^  the  music  was  left  to 
^p^  for  itself. 

Ihe  wheel  of  fortuzie  had  also 
turned  an  unexpected  revolution 
on  the  Thursday  before  Easter  at 
the  Royal  Albert  HaS.  My  last 
mxxnmter  witii  the  Royal  Fbi^ 
harmonic  Orchestra  and  its 
fflosic  director.  Daniels  Gatti, 
had  been  a dismal  concert  in 


their  Berg  and  .Mahler  series, 
which  did  not  bode  welt 

At  first,  this  latest  instalment 
in  their  on-going  Mahler  cycle  at 
the  RAH  only  promised  more  of 
the  sazzie:  Hakan  Kagegard's  grey 
singing  in  the  Kindertoienlicder 
drained  the  songs  of  even  the 
sli^test  colour.  If  be  was  trying 
to  replicate  the  intimate  scale  of 
the  Ueder  siziger  in  this  bail,  it 
was  a bad  miscalculatioo. 

So  it  was  a welcome  surprise 
when  the  orchestra  and  conduc- 
tor returned  after  the  interval  to 
overturn  all  expectations  with  a 
brilliant,  marvellously  detailed, 
ringifngTy  alive  performance  of 
the  Fifth  Symphony.  This  was  zio 
half-hearted  repetition  of 
accepted  notions  about  how  tbe 
symphony  should  go,  but  an 
interpretation  that  had  been 
. fresl^  thou^t  throu^. 

It  was  a joy  to  hear  the  Scherzo 
danna  so  l^htly  and  the  famous 
Adagietto  played  at  a speed 
which  allowed  the  music  to  smg 
in  whole  lyrical  lizies.  not  halt- 
ingly note-by-ziote  as  usual  Bvi- 
dentty  to  pre-judge  an  EUTO  con- 
cert under  Gatn'  is  tempting  fete. 

Richard  Faiiman 


INTERNATIONAL 


AMSTERDAM 

DANCE 

-HetMuxiaMheater 

Teh  31-20-551 8911 

Dutch  National  Ballet 

programme  cotnl^a  *1?^ 
of  Acts  of  UgM 
Martha  Gitftam,  with  the  world 
>«niereofKBys^^^ 

BfHfif  Sw«eet,  and  Balanohinea 

In  Cl  ^ ® 

OP6HA 

IMhertands  Opera,  Het 

MuzMdheater 

Tet  31-20SS1  8911 
Oteilo:  by  Verdi, 
k CarioRbo  in  a staging 

PMichaelfSrOber^vri^a^^^^ 

BONN 

der  Bundesrepubme 

Oeirtsdtotd 

Td:  49-228-917 1200 
' wmt.ltah'bonnJie 
ifiph  Renaissanra 
Art  and  Culture 

Court  (1503-34).  The  earfy  16m 


century  saw  Rome  estdzfeh  ftsetf 
as  the  centre  of  art  in  Europe, 
with  the  Vatican  oommtsstonifig 
work 'fitMn  atiste  kidcKiirig 
Leonanio  da  Vinci,  Michetengelo 
and  Raphael.  This  exhibition  . 
clispl^  some  of  the 
masterpieces  that  lasufted,  as 
as  detailing  the  contexts  in 
whidi  th^  were  produced;  to 

LONDON 

CONCERTS 

Barbican  HaB  • . 

Tel:  44-171-638  8691 
Qlenn  Miller  Orchestra: 

conducted  by  Ray  MeV^  In  a 

of  wartime  czessics; 

Apr  10 

Festival  HaU 

Teb  44-171-980  4242 

• Academy  of  SL  Martin  In  the 
ReWS:  Sir  NevHle  Marrtw  - 

celebrates  his  75th  brth^Jhe 

pjograiittne  Indudes  worics 

Mozart,  Britten,  and 

Mendelssohn;  Apr  14 

• BBC  Phaharmonfc:  Endless 
Parade.  Programme  of  works  by 

gritten.  • 

Pascal  Tortelier  and  featuring  me 

BBC  Singers:  Apr  10 

• London  Rtfharmon« 
On*estra:coriduc^^ 

■Botstein  In  woiKs  ^ 

^Q^ggjtlgJ3x^a^  sna 

^London  PMhanwwite  ■ . 

nnJwBtra:  Intetnali^  Serte 
ferturingHadynsTheCraaliw 

c(xidu(i^  by  Sir  Roger 
Norrsngton;  Apr  11 

exhibition 


Hayward  Qanefy 
Tel:  44-171-261  0127 
wvmJteywani^^^ry.ofg.uk 
Pehidc  Caulfield:  m^or 
n^rospeetive  of  foe  British  pop 
to/^  11,  then  touring  in 
Eurc^andfoeUS 

OP^ 

EngBsb  Nationat  Open, 

London  Ooliseunn 
TM:  44-171-632  8300 
O MalisteMft  by  Bofto. 
Conducted  by  06ver  von  ; 
DctvtSmyi  irr  a new  staging  by  Ian 
Judge;  Apr  9 

• Salome;  by  R.  Strauss.  David 
Athmton  conducts  a staging  by 
David  Leveaux,  with  a cast 
sterring  Vhriw  Tierney;  Apr  10 

LOS  ANGELAS 

CONCERTS 

Dorothy  Ctandlar  PavSon 
Tef:  1-213-365  3500 
wwwJafMLvg 
. Loe  Ai^des  PhShamtof^ 
Gon^jc^  t^  Hans  Vonk  In 
worte  fay  Webern,  Mozart,  and 
Schubert.  ec^c^  Lars 

Vogt;  Apr.  10, 11 

MADRID 
E»iiBniON 
BmdacMn  Juan  March 
Tel:  34-91-4354240 
Mac  Chagalk  TracHtions. 

40  paintings.^  the. 
RusahtofFrench  pBlRter. 
produced  bMweenI 908  and 
1976S  to  Apr  11 

NEWYORK 

CONCERTS 


Avsry  Fisher  HaO,  Uncohi 
Center 

Tet  1-212-875  5030 
www.SnGOlncer^.org 
New  York  PhUharmonlcx  Uptown 
Blues  - EHfogtonai  100;  brings 
togMher  the  Lincoln  Center  Jazz 
Orchestra,  with  Wynton  Marsafis, 
and  the  New  Ycric  Phaharmor^ 
led  by  Itort  Maeur.  The  pre^ram 
features  Qllngton’s  cornpositkms 
arraiged  tv  Marsafis  ak^  vrith 
a perftxmance  of  the  Peer  (3ynt 
Suite;  Apr  8 

OPBtA 

MeiropoCten  Opera,  Lincoln 
Center 

Tet  1-212-382  6000 
wwwjnetapera.org 

• Giulio  Cesare:  by  Handel. 
Retiums  to  the  repertory  with 
John  Nelson  conductkig  and 
Jennifer  Larmore  In  the  title  rote. 
Production  by  John  Copley,  sets 
designed  by  John  Pasc^  and 
costumes  by  Midiad  Stennett; 
Apr  10 

• Susannah:  by  Floyd.  James 
(^onlon  conducts  a new  string 
by  Robert  Falls,  with  a cast  led 
by  Rente  Flenf^  and  Samuel 
Ramey;  Apr  9, 13 

• The  Queen  of  Spades;  by 
Tchaikovsky.  Conducted  by 
V^ery  Gargiey  in  a revival  of 
Bfiah  Moshinsky's  staging, 
desired  by  Mark  Thompson. 
The  csst  Is  led  by  Plteklo 
Donfiigo,  Galina  (Smehakpva 
and  Olga  Borodlnsg  ^ 10 


PARIS 

DANCE 

Op6ra  National  de  Paris,  Optea 
BastiHe 


TM:  33-1-4473  1300 
www.opera-de-parils.fr 
Le  Parc:  this  production  of 
Mozart’s  ballet  is  choreographed 
by  Ang^  Prefiocaj  with  sets  by 
Thierry  Leproust,  costumes  by 
Herve  Pie^  and  lightlr^  by 
Jactejee  ChateieL  Stephane 
Dw)^  is  the  musical  dvector; 
Apr  9, 10, 13. 

OPERA 

Optea  Natioral  de  Paris,  Optea 
Baatine 

T^  33-1-4473  1300 
www.opera-dfrpari!sfr 
Luda  di  Lanvnsfmoon  by 
Donizetti.  Conducted  by  Bruno 
Campanetla  tn  a sta^ng 
Andrei  Serban  and  Robert 
Careen,  with  designs  by  WHiam 
Dudl^AprS,  11, 14 


PERUGIA 

EXHiemoN 

GaHeria  NarionMe  dte*  Umbria 
Tel:  39-075  574  1247 
Beato  Angelico  and  Benozzo 
Gozzofc  Renai^noe  Ptentevs. 
^ganised  to  mark  the  500th 
arvMversary  of  Fra  Ai^eBco's 
deafo,  tilts  show  kichJd^ 
missfng  sectioris  of  his  PoIWco 
dal  Oomenlcani.  lent  by  the 
Vatican  so  that  the  whole, 
restored  poiyptych  can  be  seen 
in  Its  sn&ety;  to  Apr  11 


TAMPERE 

EXHIBITION 

Sara  HiUen  Art  Museum 
Tel:  3583-914  3134 
www.teny)ereJMwyen 
Tony  Cr^g;  33  sculptures  and  a 
targe  rHzrnber  of  drawings  by  the 


i 


British-bom  artist  to  May  9 


TOKYO 

CONCERT 

Suntory  Han 

Tet  81-3-3584  9999 

Japan  Philharmonic  Symphony 

Orchestra:  conducted  by 

Kazufumi  Yama^ita  in  works  by 

Beethoven,  Rodrigo,  and  Ravel 

and  featuring  Kaori  Murafi  on 

guitBC  April 

DANCE 

NHKHaH 

The  Boyd  Ballet:  the  British 
company’s  totr  opens  with  Swan 
Lake;  A^  11 


VIENNA 

EXHIBmONS 
KuRStHausWien 
Tek  43-1-712  0495 
Jean-Mfehei  Basquiat  Paintings 
and  Wortes  on  Paper.  100  works 
on  loan  from  the  MugrabI 
Collection  rtfike  up  ^ first  show 
in  Austria  devoted  to  tite 
blacic-hispanic  US  artist;  to  May 
2 

Osterreiclrisehe  (iaierie 
Belvedene 

America:  The  New  Wdrid  in  19th 
Century  pEuntfng.  Oeafing  with 
the  period  from  the  Declaration 
of  Independence  In  1776  until  the 
US  entry  into  Worid  War  I,  this 
^tow  brings  together  works  from 
ms^  museums  and  collections 
tn  the  US;  to  Jun  20 

OPERA 

Wiener  Staatsoper 
Tel;  43-1-81444 


Madtoth:  by  VertH  Conducted 
by  Simone  Young  in  a staging 
P^er  Wood.  Cast  includes  Lso 
Nucci  and  Sitee  Coteio;  Apr  9 


ZURICH 

EXHIBITION 
Kunsthaus  2toricb 
Tek  41-1-251  6765 
Chagall  KandinslQr,  Malevich  and 
the  Rushan  Avant-garde: 
exNbition  ertoloring  the  artistic 
upheavals  of  the  ^ two 
decades  of  fois  century.  Includes 
ImportarA  Icxtns  from  the  State 
Hemnitage  Museum  In  St 
PMersburg;  to  ^ 25 


TV  AND  RADIO 

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BBC  Worid  Servite  radio  for 
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V 


16 


HN  ANCIAL  TlS^  JHUR^AY  APRILS  1>99 


COMMENT  & ANALYSIS:  CONFLICT  IN  YUGOSLAVIA 


QUENTIN  PEEL 


Unhappy  birthday 


Instead  of  celebrating  its  50th  anniversary,  Nato  should  be 
resolving  the  problems  revealed  by  its  blunders  in  Yugoslavia 


In  two  weeks’  time,  tbe  Nato 
aUiance  Is  supposed  to  be 
celebrating  its  50th 
anniversary  with  a big 
birthd^  bash  in 
Washington.  DC.  It  is  going 
to  be  a grim  occasion. 

'He  party  was  meant  to 
celebrate  tbe  success  of  the 
transatlantic  alliance  in 
winning  tbe  cold  war.  and 
its  enlargement  to  include 
the  first  new  members  from 
among  its  old  enemies  in  tbe 
Warsaw  Pact.  Russia's 
presence  was  intended  to 
underline  tbe  benign  and 
opra-mlnded  character  of 
tbe  organi^tioiL  And  the 
whole  affair  was  supposed  to 
set  tbe  seal  on  a *l3ew 
strat^c  concept"  iqiening 
the  doors  to  a foture  Nato 
role  of  international 
peacekeeping,  and  curbing 
tbe  spread  of  weapons  of 
mass  destruction,  in  addition 
to  its  traditional  task  of 

collective  d^ence. 

All  that  is  now  in  doubt. 
thanks  to  Eoso\'o.  Instead, 
occasion  will  have  to 
cooceatrate  on  forcing 
Slobodan  Milosevic  to  end 
his  campaign  of  ethnic 
eUansli^  in  KosOVO. 

It  is  one  of  the  bitter 
ironies  of  the  summit  that 
its  timiDg  was  an  important 
factor  in  why  the  whole 
Kosovo  operation  was 
undertaken  belatec^,  and  in 
such  baste.  The  allies  in 
general,  and  President  BUI 
Clinton  in  particular,  were 
desperate  not  to  have  a 
messy  confrontation  in 
Kosovo  overshadowing  their 
anniversary.  They  postponed 
the  evil  day  repeatedly.  Then 
they  rushed  into  it  without 
thinking  through  the 
consequences.  'Hie  end 
result  is  the  worst  of  all 
possible  worlds:  a 
half-hearted  bombing 
campaign  against  a ruthless 
and  determined  opponent, 
who  has  e^loited  the 
hesitation  to  drive  forward 
his  own  race  war  In  Kosovo. 


Thus  Ibr,  Mr  Milosevic  has 
made  all  the  running  in  this 
confrontation.  He  used  the 
prolong  attempts  at  peace 
negotiations  - including  US 
ambassador  Richard 
Holbrooke’s  high  profile 
trips  to  Belgrade  - to 
prepare  for  a military 
campaign  to  drive  the 
Albanians  out  of  the  rich 
northern  parts  tk  Kosovo. 
’The  two-week  suspension  of 
the  Rambouillet  peace  talks 
was  a bonus:  he  boasted  at 
the  Hme  that  he  would  need 
just  one  week  to  complete 
his  conquest.  He  got  iL 

The  Nato  bombii^ 
rampflign  has  given  him  the 
cover  to  do  so:  the 
withdrawal  of  intematioual 
observers,  and  the  excuse  of 
total  mobilisation,  gave  the 
Albanians  no  protection. 

Now  Mr  Milosevic  can 
propose  partition  of  the 
territory,  keeping  tbe  fertile 
north  for  new  Serbian 
settlers,  and  allowing  the 
Albanian  refuged  back  into 
a pacified  and  impoverished 
south,  protected  by  a Nato 
peacekeeping  force. 

If  the  Nato  allies  are  to 
deny  him  that  outcome,  they 
must  show  a great  deal  more 


determination  than  hitherto. 
They  cannot  repe^  the 
mantra  that  ground  forces 
will  not  be  used.  And  they 
must  show  themselves  ready 
to  outlast  Mr  Mllosevie. 
which  means  bombing  his 
military  forces  into 
withdrawal,  even  if  that 
means  taking  many  more 
casualties  over  many  more 
months. 

That  is  the  grim  priority 
for  the  Washington  summit. 
If  Nato  fails,  then  its 
credibility  will  be  forfeit  But 
even  if  it  succeeds,  the 
alliance's  future  needs  to  be 
reconsidered  in  a much  more 
fundamental  way  than  has 
yet  t^n  place. 

There  are  two  separate, 
and  not  entirely  compatible, 
strands  in  thinking  over  tbe 
future  of  Nato  on  the  two 
shores  of  tbe  Atlantic.  The 
US  priority  is  to  turn  the 
aHian/v»  Into  much  more  of  a 
^obal  policeman,  sbarlr^  its 
own  burden  mth  its 
European  allies  on  the  world 
stage.  Dealing  with  dictators 
- such  as  Mr  Afilosevic  and 
Saddam  Hussein  - and 
curbing  the  spread  of 
weapons  of  mass 
destruction,  is  all  part  of  it 


KosoTO  has  demonstrated 
tbe  limitation  of  tiiat  view, 
given  Americans' 
unwillingness  to  suffer 
casualties  on  tbe  battlefield 
(a  reluctance  shared,  Indeed, 
by  others).  Air  power  simply 
cannot  driver  peace  on  tte 
ground  against  ruthless  men 
with  guns,  however  superior 
its  technology.  Iraq  has 
shown  that  as  much  as 
Yugoslavia. 

‘Ihe  priority  of  the 
European  Union  members  of 
Nato  is  very  dzffereaL  ’They 
are  much  more  cautious 
about  playing  a big  role 
outside  tbe  Nato  area,  and 
£ar  more  concerned  to 
strengthen  tbe  European 
contribution  to  the  Atlantic 
alliance.  Eventually  they 
would  hope  to  be  able  to 
conduct  operatfona  without 
relying  on  US  men  and 
matiriel  - although  still 
with  US  approval  of  course. 

Kosovo  has  also  dented 
that  ambition.  ’The 
Europeans  had  to  admit  that 
they  lacked  tbe  equipment  - 
both  for  precision  bombing 
and  reconnmssance  - to 
carry  out  tbe  eawipaign 
against  Mr  Milosevic.  They 
also  lacked  the  political  wiD 
to  do  so  without  the 
Americans. 

’The  one  thing  Nato  has 
proved  in  Kosovo  is  tbat  it 
has  the  military  capacity  to 
do  what  it  is  told,  it  is  a 
blont  Instrument,  designed 
to  deal  primarily  with  a 
predictahle  military 
opponent,  such  as  Russia. 
Now,  that  role  has  gone  - 
and  Nato  is  ill  designed  to 
deal  with  the  vicious  brush 
fires  flwrt  politiral  inflghHng 
which  have  succeeded  the 
comfortable  predictability  of 
the  cold  war  era. 

Nato's  letters  must 
therefore  do  three  things  in 
Washington.  First,  they 
must  scrap  any  hint  of 
celebration.  In  Kosovo,  there 
is  nothing  to  celebrate. 
Second,  they  must 
demonstrate  absolute 
determination  to  reverse  the 
ethnic  cleansing,  with 
ground  troops  if  necessary. 
Partition  would  amount  to  a 
blessing  on  ethnic  cleansing. 
And  third,  they  must  reopen 
the  qu^ions  about  the 
wlmk  future  of  the  alliance. 
Nato’s  blunders  in  former 
Yugoslavia  have  cruelly 
exposed  the  sort  of  long-term 
problems  tbe  alliance  Is 
fedng  These  have  scarcely 
begun  to  be  considmed.  let 
alone  resolved. 


LETTERS  TO  THE 


Conflict  fails  the  test  of  what  mak^  a war 


From  The  Rev  Peter  IRitton. 

Sir.  The  logic  behind  Hum- 
phry Crum  Ewing’s  attempt 
to  justify  Nato  intervention 
in  Yugoslavia  is  flawed 
(Letters.  March  31X  ff  Seiiua 
is  not  a recognised  sovereign 
state  whose  boundaries  are 
to  be  respected,  then  neither 
are  the  other  fragments  of 
former  Yugoslavia:  Croatia. 
Bosnia,  Slovenia,  Macedonia. 
In  fact,  at  no  stage  before 
the  bombing  did  any  exter- 
nal power  suggest  tbat  Koe- 
ovo  was  not  an  integral  part 
of  Serbia.  Autonomy  was 
(^ered.  not  Independence. 

As  to  legitimate  authorise- 


tkm,  it  is  true  that  the  mat- 
ter has  been  “rehearsed”  in 
tbe  UN  on  several  occasions. 
There  is  probably  genersd 
agreement  there  that  Serb 
repression  in  Kosovo  is  a 
bad  thing  (though  wide- 
spread inHtgnaHon  WOUld  be 

hypocritical  given,  the  simi- 
lar record  of  many  other  UN 
members).  However,  the 
Nato  countries  have  not 
sought  specific  authority 
from  the  Security  CoancQ 
because  they  - rightly  - 
asflMTTig  that  such  a resolu- 
tion would  be  vetoed  by  Rus- 
sia and  China.  Accordingly, 
there  is  no  specific  mandate 


for  any  use  of  force  from  the', 
only  bo^  that  could 

give  sudi  autixortty. 

Furthermote.  for  a war:-to 
be  just,  the  afoount  of  forcte 
used  to  be  proportionate ' 


stated  alma  the.  campaign 
would  have  bad  to  invtdve 
large  numbers  . ^ ground 
troops  from  the:b^iudng.  . 

Christian  .Teflection  on.  Jus 
in  beSitm  "has  dws^  ' .beto 


.■|Al 


and  sufficient  to  ensure  ,su& . . very  realis^-  Only. 'On  ae 
cess.  The  conflict  ms  this  grounds  of  nght.mtention . 


test  noit  because  too  mudi 
force  is  bring  used,  but  too ' 
little  and  of  the  wnmg  sort 
The  sole  effect  of  a. fortnight  ‘ 
of  has  been  to  .trig-^ 

ger  a barbaric  campaign  of 
ethnic  cleansing.  .E^  to  a 
country  parson  if  was  ' clear 
from  the  start  that  it  could 
never  have  done,  anything 
else.  To  achieve  Nato's 


can  the  Nato  .leaders  be 
exonerated  fixan'-tbe  cbaige 
of  launching  an  nqjust  'war. 
Good  intentipns-'  are  - not 
enough. 


Ifeter  Hatton, 
pniii,vriich  MetifofSst.’ 
Chnrdk  • 

Droltwich.  ' . 

Hereford  and  Worcs,  HE 


Send  Russia 
in  to  police 
Kosovo 


FYom  Mr  ffkk  Lynom. 

Sir.  I read  NiaU  Ferguson's 
article  on  the  Kosovo  crisis. 
"Bleeding  hearts  and  bloody 
messes"  (FT  Weekend.  April 
3A>.  with  hope  at  first,  and 
then  increasing  delusion. 

Tlie  article  is  a critical  and 
detailed  analysis  of  tbe  situ- 
ation. tt  some  logic, 

hard  though  it  may  te  to 
swallow,  and  some  criticisms 
witix  which  the  reader  may 
or  may  not  agree.  1 searched 
tbe  article  for  concrete  and 
positive  ideas  about  how  to 
solve  the  situation.  As  usual 
in  such  political  comment 
nothing.  Hence  my  delusion. 

It  is  indeed  easy  to  criti- 
cise. People  who  decide 
actions  and  carry  them  out 
also  make  mistakes.  My 
questions  to  Mr  Ferguson 
are:  does  he  have  anything 
positive  to  offer?  Or  does  he 
prefer  to  turn  a blind  eye 
and  wait  for  the  Milosevics 
to  come  to  bis  door?  Be 
assured  they  will  come  and 
they  do  not  knock. 

Here  are  two  positive  ideas 
for  discussion:  a Russian-led 
police  force  in  Kosovo,  with 
Nato  as  observers;  a Nato 
ceasefire  for  three  days  to  let 
President  Slobodan  Milos- 
evic decide  whether  to 
accept  the  terms. 

Mr  Ferguson  and  others 
may  also  knock  ideas, 
but  can  they  come  up  with 
anything  better? 


Nick  Lynam, 

43  roe  da  Matechal  Foch, 
67000  Strasboorg, 

France 


Drop 


arms  to 
Kosovars  by 
parachute 


From  Htmna  Bosda. 

Sir.  ff  it  is  unwilling  to 
send  ground  troops  to  Kos- 
ovo, Nato  should  at  least 
drop  enough  small  arms  and 
munitions  for  tbe  Albanian 
villagers  to  defend  them- 
selves from  ejqKilsion.  As  a 
veteran  of  tbe  Waisaw  upris- 
ing I can  vouch  for  the  effec- 
tiveness of  such  parachute 
drops,  even  when  a large 
part  of  the  weapons  falls 
into  enemy  bands. 

In  such  8 situation,  the 
arms  reaching  those  who 
hardly  have  any  have  a for 
greater  military  effect  than 
those  that  fall  into  the  hands 
ri  tbeir  well-ermed  persecu- 
tors. They  certainly  helped 
us  resist  tbe  might  of  the 
German  army  for  63  days. 
Because  of  no  Further  partic- 
tpetioD  of  our  allies  or  our 
airboame  brigade  fiom  tbe 
west  we  could  not  fight  any 
more.  The  lives  of  the  survi- 
vors were  saved  when  we 
bod  been  declared  os  allies 
(combatants  respected  by 
tbe  Geneva  Coovention). 

what  is  more,  with  its 
crushing  air  superiorUy  and 
advanced  technology  ~ far  in 
excess  of  tbat  of  tbe  allies  in 
1944  - tbe  drops  can  be  far 
better  targeted  today. 


West  played  into  Milosevic’s  hands 


Prom  Mr  Tobias  K.  Vqpri 

Sir.  Your  comment  “Delib- 
erate use  of  force”  (April  1) 
asserts  that  President  Slobo^ 
dan  Milosevic  of  Yugoslavia 
is  losing  toudi  with  reality, 
ff  he  was  prepared  to  com- 
promise last  October,  you 
ask,  why  not  now  that 
the  bombs  are  falling  on 
Belgrade? 

Your  puzzlement  ia  mis- 
placed. Far  from  bring  out  of 
touch  with  reality,  Mr  Kfilos- 
evie  has  based  his  calcula- 
tion on  the  assumption  that 
he  needed  time  to  prepare 
the  “ethnic  cleansing”  of 
Kosovo,  that  air  strikes 
would  not  prevent  him  Cram 
carrying  it  out,  and  that  he 
could  complete  it  before  any 
Nato  ground  troops  would  be 
deployed.  AU  tb^  assump- 
tions are  being  borne  out  by 
current  events. 

The  basic  western  nustake 
was  to  declare  from  the 
beginning  that  ground 
troops  would  under  no  ebr- 
cumstances  enter  Kosovo 
against  Yugosfov  resistance. 


I 


IV 


I strongly  snsp^  that  Nato 
ground  forces  will  enter  Kos- 
ovo in  an  adversarial  context 
within  the  next  eight  weeks. 
But  this  comes  too  late  to 
reduce  the  terrible  human 
costs  borne  by  iunoceut 
civilians  on  the  ground. 

In  li^t  of  these  facts,  your 


recommendations  appear 
quite  inadequate.  You  call 
for  a ceasefire;  but  we  n^o- 
tiated  a ceasefire  in  October, 
put  to  good  use  by  President 
Milosevic  to  prepare  for  a 
final  solution  to  the  Kosovo 
question.  A ceasefire  pro- 
posed by  the  Yugoslavs  for 
Orthodox  Easter  seems  to  be 
mainly  intended  to  explore 
whatever  splits  them  may  be 
in  the  Atlantic  allianee. 

You  recommend  a reduc- 
tion of  Yugoslav  troops;  but 
we  already  negotiated  an 
agreement  on  troop  reduc- 
tions that  President  Milos- 
evic disregarded  without 


ooDsequences.  You  advocate 
the  deployment  of.'  Nato 
peacekeepers; . but,  two 
weeks  into  the  crisis,  we  can 
^ely  assume  that  , troops 
will  arrive  too  late  to  pre- 
vent displacement.  We 
refused  to  send  troops  to  pro- 
tect endan^red  popvdatitms; 
now  we  will  send,  troops 
to  protect  a depopolated 
tenttory. 


Tobias  K.  Vogel. 

]22  Bast  42nd  Street, 
12th  floor,  ' 

New  York, 

NT  10168, 

US 


Echo  of  previous  generation’s  hypocrisy 


From  Mr  Rodney 
E.B.AUdnsm. 

Sir.  I have  never  been  so 
ashamed  of  my  country.  The 
illegal  attacks  on  the  sover- 
eign Yugoslavia  are  despica- 
ble. cowardly  and  disastrous. 

Tbe  elected  and  re-elected 
President  Milosevic  is  no 
more  an  “evil  dictator”,  as 
he  has  been  labelled  by  the 
press,  than  presidents  FTanjo 
Turman  of  Croatia  and 
ALja  Izetbegovic  of  Bosnia. 
President  Tudjman  is  on 
record  as  saying  that  ’’geno- 
cide is  a natural  phenome- 
non; it  is  not  only  permitted 
it  is  recommended  by  tbe 
Almighty”.  President  Izet- 
begovic  believes  that  'Hbere 


can  be  no  peace  between  tbe 
isiamir  faith  and  non-lsJamic 
institutions.  Islam  must  take 
power  as  soon  as  it  is  muner- 
ically  strong  enough... and 
destroy  tbe  non-Islamlc 
power.” 

So  why  is  Nato  not  bomb- 
ing Croatia  and  Bosnia? 
They  have  killed  and 
expelled  hundreds  of  thou- 
sands of  Serbs  - 40  per  cent 
of  tbe  refugees  from  Yugo- 
slavia are  Serb,  Tbe  first  eth- 
oic  cleansing  was  of  40jOOO 
Serbs  from  (froatia  in  1990 
by  President  'Tudiman,  who 
declared  tbe  Serbs  in  Croatia 
“an  alien  minority”. 

Nato  itself  conducted  the 
biggest  ethnic  cleanring  in 


Yujgoslavia.  when  in  1995 
200.000  Serbs  were  driven 
out  of  their  historical  home-, 
land  in  the  Krajioa,  where 
they  were  a far  bigger  major- 
ity than  Albanians  are  in 
Kosovo  and  Metobije. 

What  rank  hypocrisy.  We 
have  probably  sown  tbe 
seeds  of  a major  war 
between  east  and  western 
Europe  - which  was  pre- 
cisely tbe  result  of  kowtow- 
ing to  “German  Europe's'* 
bluDderings  a generation 
ago. 


Rodney  E.  B.  Attfinson, 
60  Ashbourne  Court, 
Woodise  Park  Road, 
London  N12  8SB,  UK 


Dividing  the  region  is  the 
answer,  as  it  was  in  Bosnia 


Hanna  Koecia, 
Rayoes  Park, 
London,  UK 


From  Mr  Alexis  Getraa. 

Sir,  The  best  way  to  solve 
tbe  Kosovo  crisis  is  to  divide 
the  region.  Thie  was  also  tbe 
best  solution  in  Bosnia  but 
was  against  US  foreign  pol- 
icy interests.  Although 
retaining  molti-cthnlcity  is  a 
noble  notion,  this  will  not 
work.  ’The  US  excuse  for 
shooting  down  tbe  1992 
peace  agreement  in  Bosnia 
was  to  preserve  such  liberal 
ideas  - even  ttaou^  Bosnian 
Moslem  President  Alija  Izet- 
begovic  wrote  in  his  fslamic 
Declaration  tbat  there  can  be 
no  co-habltatioQ  between 
Moslems  and  other  groups  in 
Bosnia  and  called  for  a pure 
Islamic  state  to  cover  the 
region. 

’Tbe  west  knows  division  is 
the  answer  but  is  afraid  to 
be  seen  to  endorse  tbe  ascen- 
dance of  etbnic  nationalisni 
over  iiberai  ideals.  If  this 
had  been  done  in  Bosnia,  we 
would  have  seen  much  more 


progress.  Tbe  one  thing  all 
sides  shared  was  trade, 
which  is  entirely  separate 
from  bate.  One  could  have 
expected  increased  trade  and 
faster  locally  produced 
wealth  as  oppi^ed  to  relying 
on  outride  aid.  If  tbe  west 
treated  all  parties  equally 
ratber  than  behaving  like 
coioniaiists,  the  level  of  eco- 
nomic activity  would  have 
been  much  higher. 

is  It  not  ironic  that  the 
demonised  Bosnian  Serbs 
are  pro-free  market  and  for 
privatisation  but  ore  cut  off 
From  International  funds,  yet 
the  elites  in  the 
Bosnian-Croat  Federation 
are  hanging  on  tooth  and 
nail  and  resisting  all 
reforms,  while  siphoning  off 
hundreds  of  millions  of  dol- 
lars in  aid? 


Alexis  Gerratt, 
Rue  de  Tbenx  S4, 
Bmsseb,  Belgium 


Strikes  confirm  Russian  fears  of  past  40  years 


Prom  Ur  James  Denman. 

Sir,  Tbe  strategic  risks  of 
Nato's  bitervcotioa  in  Kos- 
ovo'are  drastically  underesti- 
mated. A few  hundred  miles 
to  the  east  of  Kosovo.  isOm 
Russians  are  watching  in 
shock.  Forty  yew  of  official 
propaganda  against  Nato  are 
roddenly  being  confirmed: 
Nato  is  attacking  a brother 
Slav  people  in  Serbia.  Rus- 
sia's werimeaa  is  hundUat- 
ingly  brought  borne 

If  President  Boris  Yeltsin 
suffered  a further,  fatal 
heart  attack  tofflorrow,  Rus- 
sian politioB  would  be 
thrown  open  to  demagogues 


and  worse,  to  the  late  laaos, 
Germany  proved  just  bow 
receptive  a humiliated 
people  could  be  to  siren 
songs  of  national  virtue  and 
evil  foreigners.  The  conse- 
quences devastated  Eunme. 
Zbirinovskys  would  find  U 
only  too  easy  to  play  on  ordi- 
nary Russisms’  misery,  sense 
of  unfairness  and  suspicion 
of  Nato.  A Russia  moving 
united  in  new-found,  milita- 
ristic vigonr  against  the 
west  is  a frightening 
Utought  Every  day  that  wo, 
Nato.  remain  in  Yugoslavia, 
we  make  it  more  possible. 

However  much  we  wish  to 


think  that  air  strikes  repre- 
sent “doing  something”, 
tbey  are  clearly  not  forcing 
Slobodan  Milosevic  to  his 
knees.  The  second  world 
war,  Vietnam  aod  Iraq  all 
tell  us  that  air  strikes  alone 
never  will.  We  have  two 
choices:  to  commit  our  sol- 
diers' Lives  to  a decisive 
ground  war,  or  to  pull  out. 
To  do  otherwise  is  to  incur  a 
risk  wc  could  never  justify 
to  our  children. 


james  Denman. 

9 Rue  MmdffiiJien  Lambert, 
77920  Samois-smvSeine, 
France 


Czech  PM 
makes  ‘modern 
law’  clearer 


Prom  Dr  RaphoM 
Papadepoulos. 

Sir.  When  I read  in  your 
columns  the  Nato  assertion 
tbat  the  legality  of  its  action 
against  Yugoslavia  was 
based  on  developments  in 
"modern  law”  (Leader, 
March  23).  I was  not  at  all 
cl^  in  my  mind  as  to  what 
is  meant  by  that. 

Was  it  that  Nato  is  follow- 
ing developments  In  modem 
law.  or  that  modern  law  is 
following  developments  in 
Nato.  and  if  the  latter  wbat 
are  these  developments  and 
what  underlies  tbeir 
modernising  effect  on  the 
law? 

In  this  context,  it  was  ver}' 
helpful  to  read  the  statement 
by  Milos  Zeman.  the  Czech 
prime  minister,  who  said 
that  "he  preferred  a diplo- 
matic solution  but  that  the 
country  had  agreed  with  the 
air  strikes  in  order  to  fulfil 
its  .Natn  obligations” 
(“Czechs  caught  out  by  Nato 
campaign".  April  3^). 

fn  the  light  of  Mr  Zeman’s 
statement,  the  apparent 
intricacies  of  the  relation- 
ship between  developments 
in  Nato  and  In  modem  law 
become  easier  to  understand. 
Surely  the  suitability  and 
modernity  of  any  law  would 
have  been  placed  under 
serious  question  if  it  foiled 
to  follow  developments  In  \ 
modem  concepts  related  to  ' 
fulfilment  of  Nato- 
membership  obligations  as 
pointed  out  by  the  Czech 
prime  minister. 


IsB:.' 

fel  •• 

fer- 


Raphael  FapadopotUos. 

52  AsmuDS  Place, 
London  NWll  7XG.  UK 


Ninnber  One  Southwark  Bridge,  London  SE]  ”9^ 


Vlfc  flfo  toai  ic»  wiaMagB  loiwa  trooi  roadm; aoMatP.  UHtbi  nnw  bn  lawo  tj  iTi  nTX  932Bi'^tai  ia  'SWi  ejiv* 
lafev  »*onillt.=oin  Pumbim  Mun  cn  an  anlatM  on  im  ft  wjb  .jo,  hBp.-.vwi»PTxom  Timd^ion  nuy  t»  kr 

KiHn  Mnitfxin  ire  main  ntimimu  Lswjaom-  Lanw-.areoKBo  wmi* 


{ 


\ i?v : 


•yiii 





'^ANCIAL  TIMES 


THURSDAY  APRIL  8 1999 


COMMENT  & ANALYSIS;  CONFLICT  IN  YUGOSLAVIA 


SOTSANCIAL  times 

Thursday  April  8 1999 

; Avoiding  a 
fruitless  harvest 


Turning  the  tide  of  war 

Nato  says  it  will  not  send  ground  troops  to  invade  Yugoslavia.  But,  says  David  Buchan,  there 
may  be  little  difference  between  this  and  sending  in  peacekeepers  after  a devastating  air  war 

After  two  weeks  of  its  — ’•  * 

air  oBenelTO,  the  tide 
of  war  may  be  taming 
in  Nato’8  favour. 


nie  ns  and  the  Borojpean  Union 
' aow  have  a chance  to  lay  to  rest 
one  at  the  silliest  and  most  dan< 
genos  trade  disputes  they  have 
. ever,  indexed  in. 

they  should  learn  from  this 
opportunity  to  defuse  future 
upsets.  The  ruling  by  the  World 
l^e  Oisaxiisation  against  the 
EU's  'banana  import  regime, 
under  which  Brussels  gives 
avouiBble  treatment  to  African, 
ewiibbean  and  Psdfic  friends,  is 
.dear.  Parts  of  an  amended  su 
regime' contravene  WTO  rules 
aod-'W«te2ui^ton  now  has  the 
to.  hnpose  sanctions  oS  auxee 
than  Stebm  a year  on  &U  tanports 
to-the-  US.  . 

ITite  ^puid,  in  a sensible 
worid, 'bring  an  end  to  a six-year 
ipiarrel  over  a.  perishable  fruit 
barely  produced  by  either  party. 
Ihe  US.  2^  been  infliiefinftd  by 
one'domlhant  banana  distributor 
and  the  EU  by  its  fr^  traders;  a 
strai^t  commercial  conflict  but 
with  wider  bnpUcatiozzs. 

The  dilute  has  been  so  pro- 
longed by  procedural  dodi^  by 
the  Buropeanis  and  inflamed  by 
tbraats  of  nnUateral  sanctioDs  by 
the  US,  that  it  risks  infecting 
impoitaht  matters,  such  as  trade 
in  genetically  modified  foods, 
hflnmmes  in  beef,  and  antibiotics 
in  food.  Bananas  have  tbtis 
become  a test  of  the  WTO’s  credi- 
tnlity  and  of  the  quality  of  US-EU 
. reitatipos.  Win  the  protagonists 
. pass  that  test?  . 

The  onus  is  now  on  Ae  EU  to 
comply  with  the  ruling  without 
delay.  K can  (hoe  US  sanctions  dr 
alter  its  banana  regime  to  fit 
WTO  rules. 

For  the  first  time,  the  panel 
suggests  what  needs  to  be  done 
to  comply.  Biit  better  still,  the 
EU-  could  do  something  not  rec- 


ommended by  the  panel:  arap 
the  r^une. 

Simply  accepting  sanctions 
would  be  unacceptable  bw^nae 
the  innocent  would  sufEer.  Tin- 
kering with  the  r^ime  would  be 
just  as  bad.  The  r^ime  is  wrong 
in  concept  and  execution.  Wrong 
in  concept  because  it  has  disad- 
vantaged the  economies  it  was 
supposed  to  enrich.  H has  fos- 
tered an  unhealthy  dependency 
on  hananas  so  Caribbean  produc- 
ers have  fail^  to  diversify. 

Wrong  in  execution  because 
the  regime  costs  .EU  cqasumeis 
at  least  10  times  more  — fin  artiS- 
dally  hi^r  prices  - than  it  ben- 
efits prodnoers.  If  the  aim  is  to 
help  poorer  economies,  direct  aid 
would  be  less  wasteftiL 

But  the  EU  shows  no  signs  of 
asting  its  banana  trade  prefer- 
ences. Officials  yesterday  said 
they  reserved  the  right  to  appeal 
against  the  WTO  Judgment  on 
tile  wgime  - tbeu^  there  is  no 
appeal  against  the  eam-Wrtti^  It  is 
hard  to  see  what  could  be  gained 
by  that:  the  regime  has  been 
repeatedly  condemned  by  the 
WTO  and  its  predecessor,  the 
Gatt. 

Equally,  the  US  administration 
has  a responsibility.  WTO  soap- 
ties  in  Cemgress  have  yiet  to  be 
persuaded  that  the  oiganisattoD 
is  efEective  at  solving,  disputes. 
This  dismal  saga  has  exposed 
great  ambtedties  in  the  WTO’s 
di^nite  settlement  rules.  If  any 
good  is  to  come  of  it,  the  opportu- 
nity should  be  taten  to  listen 
up  and  darifir  these  rules. 

The  US  should  play  a fUD  part . 
in  these  eSbrts.  and  work  har^ 
at  persuading  its  sceptics  of  the 
virtues  of  the  WTO.  If  this 
chance  is  missed,  b?manfla  could 
be  a taste  of  worse  to  come. 


European  rates 


Europe  has  stumbled.  Whereas 
the  US  has  weathered  the  global 
economy  with  strong  growth, 
supported  Ijy  strong  iimstniear 
and  cottsumptkm.  tiie  eurc^nme 
has  done:  the  opposite.-  i^-  istei^ 
est'iiate  citi  Is  overdue.  . 

The  German  economy-  con- 
tracted in  the  last  three  months 
0^  1996.  todustrial  butput  has  ool- 
la^d  as  the  world  economy 
stowed.  Goldman  Sachs  predicts 
German  growth  of  lA  per  cent 
conyared  to  2.8  per  cent  last  year 
(the  European  Central-  Bank 
keqpis  its  econoimi'e  forecasts 
secret).  There  , is  no  inflation. 

Genuany  aocoonts  for  a third 
of  the  enro-econamy.  Italy,  vduch 
accounts,  for  18  cent,  looks 
similar:  mdustital  out- 

put, w^  growth  and  no'  Infla- 
' luiD..TbeDrendxeconon9.22per 
cwrt-of  the  euro-zone,  has  loov^ 
'mcM^i^ltent;  la^ly  due  to  a 
store  rd»st  sto^vke  sector.  But 
again,  fhi^  is  no  inflation. 

The  euro-zone  will  struggle  to 
iaadi  2 per  emit  growth  this  year. 
This  will  depend  on  exports 

hp»»gny»  rfamand  is  SO 

weak.  Business'  confidence  and 
investment  have  been  under* 
loteed.  Consumer  sentiment  is 
haWeir  hUt  gpgwdlng  iS  SUhdued. 
Deflation  in  the  euro-zone'is  a Ear 
■greater  risk  inflaiton.  . 

Lowtf  intteest  rates  will  not 
htip  Ireland  and  Portugal  contain 


their  boonui%  economies.  This  is 
unfortunate,,  but  cannot  be 
help^  They  acconnt  for  1.3  per 
cent  and  1:6  per  cent  of  the  euro- 
zone's economy  re^iectiv^. 

' Mot  'win  interest  rat^  sedye  an 
Europe’s::  problems:  long-term 
strocttiral  reGonnis  requirid.  But 
action  is  also  needed  to  tadde 
£iirope''s  .c^^fleal  imAlmn.  With 
fiscal  policy  constrained,  lower 
interest  rates  are  needed.  The 
euro’s  10  per  cent  slide  against  I 
the  dollar  baa  provided  some  i 
rdief.  But  not  enough.  , 

. Lower  Inteest  rates  are  heeded  I 
to  &ve  a boost  to  European  i 
nidustzy!  Because  026  per  cent , 
wfll  dbltttle,  the  ECB  must- cut 
by  at  least  0.5  per  cent  This  wDl ' 
demonstrate  that  the  ECB  is  ' 
aware  of  the  importance  of : 
demand-  It  Will  slso  demonstrate 
to  an  inoeh^n^  annoyed  US  : 
administratitai 'tint' the  :ECB  JS  ] 
not  comidetaiy  oblivious  to  the 
importance  of  European  grawtir ' 
at  a time  when  the  strng^izig.i 
ftcnnnmy,  and  ZDO^  OT, 
the  .devhlojdng  wmid,:  deqperatdy  ^ 
needs  to  inoease  exports. 

The  leason  that  the  ECB  has  i 
sat  <m  its  so  ikr  is  preshm- , 
rtoly  timt  tt  thou^t  cutting  rates, 
in'  the  face  of-  German  djemands, 
would  damage- its  credihiZity. 
With  Oiskar  laftmtaine's  depar- 
ture, titis  is  no  longer  a worry. 
The  jSCB  'should  not  delay. 


Algeria’s  chance 


Alger's  - presideuUal  electlos 
neyt  week  is  an  opportunity  fOr 
tbe  onialxy  to  be^  hedmg  the 
wounds  of  more  than  seven  years 
of  savage  bloodshed. 

Fhr  the  tinte  since  the 
botched  election  of  1991-1992, 
whsh'fhe  islamte.Salvatiim  Front 

was' stopped  from  winniSE  ^ 
parttmnentary-maJorz^,  ^ cam- 
pdgnJs- dominated  by  candidates 
bdieve.  is  diak^oo'-jather. 
fitan  for^  The  debate'  is  al»ut 
peMe,rreccotdliatibn.  and  k grad* 

• .uai  retreat  of.  the.  army  froto. 
poHtica:".-  V 

The  poD  comes  at  a tune 
wKtti-the  leybl.of  vtel^  hj; 
dMiHpffd-  TfiffS.are  still  daily  bH- 
ihg^  but'tiat  the  massacares 
of  civiEaas  of  a year  aga  ' 

Algeria  could  miss  this  oppOT*. 
tn^  if  its  fractious  regime  feus 
to  stieft  to  its  promise  of  a free 

-' todL  <aven  the  couolay’s  ahya^ 

eiectlQD  record  and  the  fact  that 
piwny»  of  £i^  elections  have 
an  tod  dteh  been  ignored  “ ^ 
ing  tiiere  must  be  mwxs 
about  the  li^xme’s  .wSlingness  to 
retrtain  pgrrt^  ' . ^ ^ 

. The  diectoral- -campaign 

-ihaai^onsly,  with  signs  that 
the  regime  wanted  to  push  a. 
favourite  candidate  tbrou^ 
■Pmifai  retired,  generals  ^ 

said'te  have  persuaded 
government  party  leader^  w 
hack  Abdelazto  BouteDika,  tne 


fonner  .foreign'  minister.  This 
0ves  him'  a head'stazt 
over  the  other  slx.candi&tes. 

- iifr  BfTwfafBita  ssys  he  is  a/st- 
mitted  to.  inak  tor  natSoaal  rec- 
onciliation and -a  broader  di^ 

- l(^(be-  This  is  a good-dgn.  But  bis 
chances  of  bringing  peace  to 
Alfipria  wmfld  be  grea!^  leopard- 

jsed  ti  Ins  vicieny  were  ^ nmilt 
of  ariggedpolL  ■ - . 

The  other  candidates  . know 
tiiey  ara  at  a dteadvaintage.  But 
they  azn;iu^plng  the  lack  of  unity 

witbin'ihfi  regime,  ^ 'work -to 
\their  benefit  and  limit  tempta- 
to - rig  the  ballot.  Ti^ 
remain  enooutagsd  that  ontgo^, 
r.<aiiiinft  Zerouali  who 
term,  after  an  intsa:- 
nal  power  strug^,.  Is  among, 
those  In  government  who  are 
detennined  to  hold  a fair  pedL- 
The  intenstaonal  community 

an  oppcatimify'te  eemtrib- 

ute  to  the  poll’s  transparency 
whmi  it  fidM  to  le^fad  to 
calls  of  wane  candidates  to  msJst 
oa  tteporeseMe  towsgn  wserv- 
ere.  Western^  gbvmnm«its 
also  remamed- largely  sflein.'on 
the  It  Is  hot  too  late  fts- 

ty.am  make  clem  to  the  govei& 
sent  that  Algteia  mart  be 
to  its  word,  and  that  an^tf 
election  would  not  <auy  be 
a rectoe  fi>r  nusre  disaster,  but 
^voold  alto  provoke  strmig  con- 
from  the  west  - 


After  two  weeks  of  its 
air  oSenslva,  the  tide 
of  war  may  be  turning 
in  Nato’8  tovour. 
Exploiting  clearer  over 
Yu^avia  this  week,  allied  war- 
planes have  been  bombing  day 
and  night  For  tiie  first  thne,  they 
caught  a Serb  azmy  convoy  in 
tbe  open  in  Kosovo  on  Tuesday. 

Nato  has  now  brushed  aride  as 
inadequate  two  peace  overtures 
from  m^esldeat  Slobodan  Mltos- 
evic  - Us  MarA  to  proposal  to 
pun  some  of  his  tor^  out  ctf 
Ebsovo  in  CTchanga  an  to 
all  Nato  bombing,  and ' this 
week's  unilateral  ceasefire  by 
Serb  forces  in  Koaovo.  That  the  * 
second  overture  has  ccmie  witizhi 
a week  oi  the  first  is,  said  Robin 
Cook,  Britain's  formgu  secretary, 
yesterday,  a sign  “that  President 
Milosevic  is  tolterisg^  (rather 
than,  say,  achieving  his  aim  of 
depopvilatlng  Eosovo).  To  listai 
to  Mr  Cook  and  other  Nato  lead- 
ers, tbe  only  deteminant  of  the 
length  of  the  war  is  how  long  it 
takes  tiie  Yugoslav  leader  to', 
crumble  and  sue  tor  peace  on 
Nato's  terms. 

But  Nato  unity  could  cramble, 
too.  After  a wobbly  start,  whra 
Italy  as  as  Greece 
reservations  about  the  bombing, 
alliance  solidarity  has  steadily 
increased  in  response  to  the  bru- 
tal ethnic  cleansing  is  Kosovo 
and  to  the  growing  realisation  by 
almost  all  of  the  19  aOleB.  tiiat 
Nato’s  future  dop«uis  on  it  ’’win- 
ning” in  Kosova  But  three  fac- 
tors could  now  start  to  uxtder- 
mine  unity  within  Nato,  and 
public  simPfsrt  for  it.  - 
Fiist,  the'conflict  will  begm  to 
look  ludustifiable  to  voters  if 
Nato  strikes  continue  but'  Serb 
operations  in  Eosovo  do  not. 
Thera  was  no  independent  confir- 
matxon  yesterday  that  the  Sabs 
bad  ki^  thitir  promise  to  haw 
attacks  on  tiie  Eosovo  Liberation 
Army  (KLA)  at  on  the  previ- 
oos  ni^t:  but  mnee  they 
to  have  virtually  desbit^ed  the 
KLA,  they  may  have  done  so. 

Se^d,  Tugcslavia  to 

have  a negotiatii^  weapon  in  the 
form  of  Ibrahim  Ri^va,  the 
moderate  ^hslc  Albanian  leader. 

It  claims  Mr  Ri^Dva  is  ready  to 
discuss  peace,  the  return  refu- 
gees and  Eosovo  autonomy  with  < 
Belinda.  Reports  that  Mr  j 
Rogova  is  under  house  arrest  in  i 

pristina,  aiid  that.  A»m«nd  fnr  ] 

a Serf)  troop  puH-oot  is  bmng  ceo-  i 
sored,  make  it  praoatare  to  say  1 

that  be  will  prove  a coDaborator.  i 
BmR.WDOldnatbeoatcdGhar'  1 
acter  tor  the  padfist  Bfr  Rogova  . 
to  call  for  Nato  to  stop  bombing. 
Hr  Rligova’s  eredibill^  had 
slipped  before  the  conflict  At  fbe  - 
RambouilM  m^ptiations  in  Feb- 
ruary, international  mediators 
said  he  ajgteai^  to  be  in  a cata- 
toanc ' tranda,  and  haitd^  effec- 
tive leadership  over  to  the  KLA. 
who  regard  h*™  as  a.  traits . 
Many,  or  most  retogocfl  wiE  take 
the  same  attitude.  But  tor  those  . 
tow  left  in  Kosovo,  Sogovan  pad- 
flam  may  seem  less  teiriUe  than  I 
what  they  have  got  now.  ' 1 

Third,  Yugodavia  has  found  a 
friend  mediator  in  Mbscow.  : 
'Galvanised  out  of  his  sickbed,  i 
President  Boris  Yeltsin  first  i 
threatened  to  cut  all  contacts  i 
with  Nabt  text  is  now. bombard-  '( 
ing-  ‘Western  govenunmxta  with.  ( 
requests,  for  the  Ccmtact  (Sroim  i 
aj^tiieCfroupofEi^tomeetto  1 
Kosovo.  Mr  Rogova  also 
seems  to  be  at  tbe  centre  of  peace  i 
plans  floated  by  Russia.  Russian  i 
mediation  is  not  to  be  Hghtiy  <Ms-  i 
missed,  Th^  are  srindfUl  both  of  i 


(,  \v  A 

^AA^A/} 


:;li 


Russian  intelligeDce  to  the 
Mediterraxiean)  and  are  anxious 
to  keep  on  good  terms  with  tbe 
alliance’s  giant  neighbour. 

AJl  these  factors  may  mean 
that  Mr  Sfilosevic’s  next  peace 
ovmtore  may  not  be  as  easy  to 
reject  as  the  first  two.  But  for  the 
moment,  Nato  feels  after  the  set- 
backs of  the  first  fbrtni^t  - the 
crash  of  the  US  Stealth  fighter, 
the  c£^ture  of  the  tiiree  US  sol- 
diers, the  abandonment  of  many 

bombing  missinns  dU6  tO  “Rnlkan 

Mr  Milosevic’s  next 
peace  overture  may 
not  be  as  easy 
to  reject  as 
toe  first  two 


cload  cover  - tbe  west  is  now  in 
tbe 

Over  the  Easter  weekend,  Nato 
aisft  ffhawg»«^  its  war  aiiwg  in  006 
important  aspect  Out  of  a nflx- 

tnra  nf  KirwigriWarian  OObage 

military  gonfliiMira,  it  demandgii 
the  withdrawal  of  aO  Serb  fanes 
from  Eosovo  to  allow  the  return 
of  aU  rdUgees  protected  by  an 
international  security  force. 

In  the  end,  this  appear,  to 
strengthen  Nato’s  commitment 
to  send  troc^  into  Kosova  But 
allied  politicians  and  planners 
sUn.  say  must,  and  can,  be 


the  Tniaffhiflf  t>iat  MOSCOW  could  .-done  witiiout  a forced  invasion 
mahe  Qt  has  already  sent  one  of  the  province,  thanks  to  the 


efficacy  now  erf  its  air  campaign. 

In  the  past  few  days,  Nato  has 
virtually  finished  off  Yugoslav- 
ia's air  defence  as  an  integrated 
systmn  linking  radar,  command 
and  control  cosqmters  and  mis- 
siles. It  believes  tbe  Serbs  may 
stiO  have  truck-mounted  or  hand- 
held surface  to  air  missiles. 
These  could  be  eSective  against 
raids  tn  daytime  or  by  the  slower- 
moving  Apache  helicopters 
wUcb  the  US  is  deploying  in 
Albania.  Nonetheless.  Nato  has 
established  dear  air  superiority, 
and  is  using  it  to  hit: 

• Military  infrastructure  such 
as  barracks,  military  airfields, 
and  munitions  toctories.  Many  of 
the  barracks  appear  to  have 
beenempty  of  army  and  police  at 
the  time  they  were  Ut,  but  half 
of  'Yugoslavia's  top  of  the  line 
MiG  fighters  have  been  destroyed 
on  the  ground. 

• Oil  refineries  and  depots. 
Serbia’s  two  refineries  at  Novi 
Sad  and  Pancero  have  been  hit, 
while  earlier  this  week  the  UK 
defeDire  mimstTy  was  showing  off 
film  of  a combined  Harrier/ 
Tornado  attack  on  Kosovo’s  main 
fUd  depot  at  Pristina. 

• General  infrastructure,  such 
as  two  bridges  across  the  Danube 
at  Novi  Sad,  and  some  general 
industrial  tactories  hke  tbe  chem- 
ical works  at.  Lucani  reported  to 
liave  been  hit  yesterday. 

The  political  wisdom  of  hitting 
targets  in  Montenegro  and  Vqjvo- 
dina  (the  Huf^arian-populated 
area  which  lost  its  provincial 
autonomy  at  the  same  time  as 
Kosovo)  can  be  questioned.  But 


such  political  niceities  have 
taken  second  place  to  the  overall 
strategy,  which  is  to  weaken 
Yugoslav  forces  by  robbing  tiiem 
of  fuel  and  cutting  their  commu- 
nications. and  so  make  It  impos- 
sible for  them  to  reinforce  Kos- 
ovo. Nato  will  then  be  able  to  hit 
the  40,000  Serb  army  and  police 
there. 

Indeed,  though  Nato  demands 
that  Serb  forces  withdraw  from 
Kosovo,  its  strategy  may  actually 
prevent  them  doing  so.  Noting 

'Nato  should 
remember  what 
happened  to 
Iraqi  forces  on 
toe  Basra  Road’ 


the  recent  French  success  in 
blowing  tbe  rail  bridge  across  the 
Ibar  river  near  Kosovo’s  border 
with  Montenegro,  a d^ence  min- 
istiy  official  in  Paris  said  yester- 
day "our  aim  is  to  destroy  their 
forces  on  the  spot." 

In  London,  a UE  minis- 

try official  warned  that  the  same 
topc^^hy  that  would  make  a 
Nato  invasion  of  Kosovo  so  haz- 
ardous could  work  against  the 
Serbs,  if  their  retreating  armour 
were  caught  in  a narrow  defile. 
’’They  should  remember  what 
happened  on  the  Basra  Road,"  he 
ssdd  recalling  tbe  way  Iraqi 
forces,  scrambling  to  get  out  of 


Kuwait,  got  themsdves  snarled 
up  in  a masrive  traffic  jam  and 
were  destroyed. 

But  what  if,  againgf  the  odds, 
Mr  Milosevic  and  his  forces  are 

still  banging  on  In  tWO  OT 

three  months’  time?  Would  then 
Nato  invade  Kosovo  with  ground 
troops?  The  answer  stQl  seems  to 
be  no  > despite  the  mounting 
criticism  that  by  ruling  out  this 
option  Nato  reduces  the  pressure 
on  Mr  MHosevic  aoid  de^te  tbe 
rising  support  among  western 
publics  for  ground  troops  as  a 
last  resort. 

At  present,  Nato  has  19,000 
troops  in  Macedonia.  Most  of 
them  were  sent  titber  to  extract 
international  monitors  from  Eos- 
ovo (who  actually  got  out  last 
month)  or  came  as  the  advance 
guard  of  the  planned  28,000- 
strong  Kosovo  peace  implenmta- 
tion  force  (EPOR)  which  was  to 
underwrite  the  defunct  Ram- 
bouillet  accords.  Because  of  this 
background,  they  are  lightly 
armed.  Tbe  4.800  British  troops, 
for  example,  have  only  13  tanks, 
two  companies  of  armoured  cars, 
and  one  artillery  battery  between 
them.  Thou^  London  may  soon 
send  out  a few  more  troops,  there 
are  no  plans  for  major  rei^orce- 
meats  until  peace  breaks  out. 

Fbr  several  reasons,  Nato  stlR 
does  not  want  to  contemplate  a 
fizlly-fledged  invasion.  It  would 
be  seen  symbolically  as  even 
more  of  an  infringement  of  Yugo- 
slav sovereignty  than  air  attacks. 
It  would  also,  smse  in  Nato  feel, 
appear  to  pave  the  way  for 
Kosovo  independence  which 
the  alliance  does  not  (yet) 
endorse. 

Then  there  are  the  weightier 
problems  of  numbers  and  logis- 
tics. AU  Nato  planning  has 
assumed  that  the  allies  would 
need  a minimum  invasion  force 
of  100,000-120,000  bearily  anned 
tnK^:  timt  is  the  number  needed 
to  give  them  an  advantage  of  3:1 
over  Serb  forces.  It  would  tate  6-8 
weeks  to  assemble  such  a force  in 
Macedonia,  whicb  even  thougb  It 
has  only  two  roads  into  Kosovo  is 
a better  launching-pad  than 
Albania.  Steep  mountains  sepa- 
rate Albania  and  Kosovo,  and 
Albania's  main  port  of  Durres 
does  not  have  tbe  cranes  and 
piers  to  offload  an  army. 

But  the  route  used  to  get  the 
KFOR  advance  guard  from  the 
Greek  port  of  Salonika  Into  Mac- 
edonia mi^t  not  be  open  to  an 
invasion  force.  Greece,  the  only 
ally  to  call  for  Nato  bombing  to 
stop,  is  imlikely  to  be  party  to  an 
invasion.  It  would,  finally,  be 
very  hard  for  an  invasioo  force  to 
manoeuvre  through  tbe  Kosovar 
refugees  in  Macedonia  without 
inviting  reprisals  on  them. 

There  is,  however,  one  new 
weapon  that  blurs  tbe  distinction 
between  air  and  ground 
operations.  This  is  the  anti-tank 
Apache  belic(q)ter.  Tbe  US  anoy 
is  deploying  24  of  them  in 
Albania,  with  the  MLRS  rochet 
sj^tmn,  to  heto  US  A-lO  *tenk- 
biister"  planes  against  Serb 
annour.  "Are  the  Apaches  just 
an  extension  of  the  A-10  opera- 
tion, or  are  th^  the  start  of  a 
ground  invasion  force?”  asked 
one  European  defence  ministry 
official  yekerday. 

For  the  moweat,  the  answer  is 
firmly  the  former.  But  that  could 
change.  Just  as  the  dislfrictioii 
between  air  and  ground 
Operations  is  blurring,  so  could 
tbe  line  between  a fully-fledged 
invading  army  and  a Nato  peace- 
keeping force,  bailed  by  Apadies 
and  marching  into  a country 
whose  forces  have  been  deci- 
mated by  allied  air  power. 


OBSERVER 


Bye  Bye 
Big  Finger? 


It's  caNed  the  Big  Finger,  ancj  it’s 
the  time-honoured  way  each  . 
Mexican  president  hand-picks  Ns 
sucoeesor  befwe  leaving  the  - 
'staga  But  could  tbe  traefitJon 
have  met  Rs  end? 

' Charisma-iiree  Incumbent 
£mesto  Zeefilb  has  vowed  not  to 
poM  the  finger  of  tote  at  airyone, 
leaving  Ns  party  to  make  up  its 
owntNnd.  . 

S!^  word  cm  the  street  to  teat 
the  pito^dent  tovouis  his 
eowtXQf'teoted  intoior  n^iister 
Francis  Labastida  as  party  ' 
^kUc^  in  next  yeff's  ■ 
priesidaifiaf  Section. 

That’s  enraged  ancOter 

hopeful,  Mancid  ' 
B^eO,  Who's  called  forZatfiUo 
. to-st^.  away,  to  aDcw  a-fair^^ht. 

. BailiM^owneiforisM 
ctonwdaflo  r^bmi  bayehY 
fsxactty  apatided.  Once  he 
si^terWsed  a presktential  race 
when  the  oortexiters  mysteriously 
ctash^  dfity  to  be  rssbaed  to 
' vmldig  order  udtii  the  party.  - V 
ea^idate  suddenly  In  to^nt ' 

Mat's  more,  Barfiett  rn^  be^  ! 
geifirigdlstraGted^xirnlhe'real  ! 
I tftraat.Anotherppnkialvder^ 

I Nfigu^  Alemiri,  is  bu^ 

, in  Ns-hafty  stake  in  Televisa,  & 
mecfo'^arA  whose  teiap  operas 
aiid  domhate  moat 
• Mmdeans’  waking  hours. 

That  ctawotientty  rids  Attandn 
of  aoonSet  of  lnteresf  Just  as  the 
contest’s  abouf  to  be^  He's 


been  ooy  about  hto  Intentions, 
but  is  ^tead  in  the  poito. 

Aletindn  cbuld  well  prove  a Nt 
- and  brnig  down  the  curtani  on 
the  ^ Rt^er  show. 

Building  blocks 

There's  been  plenty  of  kderest  to 
Moscow  tf)Out  the  Swiss-baaed 
constmeflem  company  Mab^sx 
and  fls  conttacte  to  renovate  the 
KrsmRn  and  other  puUio 
bundir^ 

The-cointry'a  embattled 
prosecutor  genwad,  who's  been 
ofitoiatly  suspended  by  President 
Boris  Yeltsin,  has  started  a 
crirntoal  irMstigatton  into 
whether  the  company  gave  any 
fcicteacksih  return  for  the' 

' oormNsstona  Mabeteoc  denies 
i any  wtongdefing. 

The  affair  may  also  interest  the 
Russian  State  Autfidng  Chamber, 
which  is  responsible  fta’ 

supervldng  the  spenitt'Q  of 

pttofc  filn^  And  indeed  it's 
be^ning  to  look  into  the  issue. 
Butlt  may  prove  a touch 
aitoarrasising:  guess 
cpntosrty  he^>ed  build  the' 
'Chamber's  own  garish 
marUe-floored,  gold-and^lass 
headcjuarters. 

Holiday  camp 

Leea  hope  the  US's  blg-heaited 
gesture  in  taking  to  ^,000 
Kosovar  refugees  isn’t 
misexsnstrued. 

Sure,  the  ethnic  Albanians 
aren't  on  their  way  to  America 


ftseti,  but  to  the  CKjantanamo 
Bay  naval  base  in  eastern  Cuba. 
And  of  (XMirse  theyTI  be 
surrounded  by  mtoefields,  barbed 
wire  and  US  and  Cuban  watch 
towers  manned  by  amed  troops. 

But  at  least  they'll  samfirie  the 
trqifoal  Caribbean  air  ' even  if 
toey*U  be  staring  at  Cuba  across 
the  wasteland  of  the  ‘Cactus 
curtalQ”,  one  of  the  last  Cold  War 
front  Itoss  around. 

Still,  the  Kosovars  shoiddn’t 
eoqtect  a warm  w^come  from  toe 
n^ghbours.  Havana  dlsputee  the 
US’k  rtoht  to  Guantanamo  and 
has  flzzjsd  virith  outr^  at  Nato's 
attacks  on  Yugc^avia.  So  its 
response  to  the  visitors,  when  it 
comes,  to  likely  to  be  as  heated 
as  the  sky-high  temperatures  for 
which  tbe  enclave  is  rwiowned. 

British  back 

' No  matter  how  far  you  go  in 
Hong  Kong,  you  can  always  end 
up  near  whm  you  began. 

A couple  of  years  ago,  Hubert 
Ng  decamped  from  Cable  & 
Wkstoss  subsidiary  Hongkong 
Telecom  to  become  chM 
ocecutive  of  SmaiTone,  an  up 
and  comtog  ceOular  operator. 

• But  ire  didn^  manage  to  throw 
off  toe  shade] es  for  lor^. 

British  Telecxnn,  (3&Ws  main 
tlv^;  to  buytog  a be  ateka  In 
SmarTone  - and  appointing 
efirsetore  to  its  bo^.  So  it  must 
be  d^  vu  all  over  agato  for  toe 
polyglot  at  least  as  far  as  ' 
de^mg  virith  Brits  is  concerned,  j 

Which  to  aii  rather  tronic.  The  i 


' cognoscenti  had  once  thought 
that  with  Hong  Kong  back  in 
Chinese  hands,  there’d  be  more 
takeovers  by  mainiafid  based 
companies  and  British  Influence 
would  recede.  But  that's 
forgettng  that  the  sun  never  sets 
on  the  Empire.  Anyone  for  a 
G&T? 


Exquisite 


There’s  timing  - and  then  there’s 
timing.  Rty  Croatia,  which  was 
planrting  to  drum  up  US 
tnvestm^  with  the  opening  of  a 
new  ccmajlate  in  Chice^o  tttis 
week  - only  to  find  a brut^  war 
raging  on  'its  borders. 

Undeterred,  toe  toree-day 
event  - which  climaxed  vrito  a 
concat  by  Croatian  pianist  Ivo 
P^oretic  and  the  Chicago 
Sy^hony  Orchestra  - continued 
as  pinned. 

They’d  gone  to  so  much 
effort,  there  was  a feeling  that 
they  should  go  ahead,”  says  one 
sympatitetic  advtoer.  &en  so, 
sublets  sueh  as  Croatian 
tourism  and  wine  have 
seemed  a little  berides  toe  point 


CK^urbir^  news  from  China.  A 
restaurant  owner  has  bean 
sentenced  fCY  poisoning  the 
' donkey  soup  at  anotoer 
establishm^  No  less  toan  143 
people  ill  after  Chi  Jianguo 
threw  poison  into  hto  rival's  pot 
Maybe  It’d  be  best  to  stid^  to  tire 
gerbti  curry  In  toe  future. 


100  years  ago 

Amaiiem  MaeMnery  For  Mffl 
In  CMna 

America  has  the  honour  of 
having  furnished  the 
matatineTy  for  the  flrst  woNlen 
min  in  China.  This  machinery, 
which  was  fiantohed  by 
Pennsylvania  manutoctorsrs,  to 
now  on  Its  way  to  Tlentain.  We 
are  assured  that  there  was 
‘strong  rivalry  for  the  contract 
on  toe  part  foreign 
madiinists”.  and  not 
unnaturally  our  American 
friends  are  indulging 
themselves  In  much 
setf-laudab'on  ov^  toeir 
success.  We  in  Britain  are  so 
accustomed  to  regarding 
ourselves  as  toe  world’s 
provider  of  textile  machinery' 
toat  it  comes  as  somatoing  of 
a shock  to  fttd  a mere 
American  concern  malting  a 
successful  bid  fex'  a sh^  of 
toetrada 

50  years  ago 

Tiifco  (flmonsiofMrf  Fgm 
Copenhagen,  April  7.  World 
interest  has  been  aroused 
tiie  claim  of  a Danish  engine^-, 
Mr  Wendefooe  Sdviver,  to 
have  discovered  the  perfr^ 
torefrdimen^mal  film  ^totem. 
A conifeiteice  of  Daruah  1^ 
oqrerts  wtd  representatives  of 
a 90up  of  r^nwican  financiers 
has,  according  to  Mr.  Schrhrer, 
already  been  hM  in  Paris. 


IS 


,*  > • • J • **; 


PRINTERS 
FAX  MACHINES 


FINANCIAL  TIMES 


■'WWW . b r y a'.n  t d'TD'  •.  u’i?  ■*' 


THURSDAY  APRIL  S 1999 


THE  LEX  COLUMN 

Empiy  threat 


Normally  companies  trying  to  win  bostile 
bids  reserve  tbelr  aggression  for  the  man- 
agement of  the  target  company  and  direct 
a charm  offensive  at  sbareholders.  Not  so 
Viith  Olivetti.  As  Its  battle  for  Telecom 
italia  reaches  its  climax,  Olivetti  is  resort- 
ing to  threats:  Roberto  Colanlnno,  chief 
executive,  yesterday  said  he  would  make 
shareholders  feel  sorry  if  they  r^ected  his 
bid. 

Investors  should  not  give  in  to  these 
tactics.  Rather,  they  should  view  than  as 
the  last  fling  of  a company  that  has  failed 
to  win  the  argument  on  its  merits.  Indeed, 
the  threats  are  just  the  latest  reason  to 
doubt  Olivetti's  credibility. 

The  most  serious  incident  occurred  last 
week,  when  the  company  sold  24m  Tele- 
com Italia  shares,  depressing  its  share 
price.  Not  only  does  tiiat  mean  investors 
con  have  little  confidence  that  there  is  an 
orderly  market  in  Telecom  shares  but  the 
market  had  previoiuly  been  led  to  believe 
that  Olivetti's  stake  in  Telecom  was  oegli- 
gible. 

.Add  to  this  the  fact  that  a formal  offer 
document  has  not  yet  been  published,  so 
Investors  cannot  examine  the  fine  print 
Nor  bas  Mr  Colaninno  made  clear  who 
will  run  Telecom  if  his  bid  succeeds.  In 
the  circumstances,  the  offer  looks  mushy. 

If  Olivetti  was  just  offering  cash,  its 
damaged  credibility  might  not  matter.  But 
40  per  cent  of  its  offer  is  in  bonds  and 
shares.  Moreover,  the  offer  leaves  many 
shareholders  out  of  the  picture:  it  does 
not  extend  to  Telecom’s  savings  share- 
holders, who  represent  29  per  cent  of  the 
capita]  structure:  nor  to  the  47  per  cent 
minority  in  Telecom  Italia  Mobile.  There 
is  even  a risk  that  many  Telecom  ordi- 
nary shareholders  could  end  up  as  a 
mioorit)'.  following  Olivetti's  revelation 
that  it  may  proceed  with  its  oflGer  if  tt  ends 
up  «1th  a stake  as  small  as  35  per  cent. 

These  minorities  could  be  trapped  in 
the  elaborate  cascade  of  Chinese  boxes 
that  Mr  Colanlnno  has  constructed  in 
order  to  control  a vast  empire  with  the 
minimum  of  capital.  That  Is  why  Oli- 
vetti's tattered  credibility  matters. 

Even  so,  it  might  still  be  worth  backing 
Olivetti  if  it  was  offering  a fhncy  price. 
But  the  offer  of  CIIJSQ  a share  Is  only 
middling.  That  is  rou^y  what  Telecom 
would  be  worth  if  it  traded  on  the  same 
cash  flow  multiple  as  Its  peers  in  the 
European  telecoms  industry. 


[;V?  A-. 


Revlon 

Stars  prfu  retathe  10  Ite  StP  Coniposiie 


SHRttOttnnity 

Of  course,  Telecom  has  tymcally  traded 
at  a discount  to  its  peers.  But  that  is 
largely  because  its  management  used  to 
be  a laughing  stock.  is  no  longer 
true.  In  Franco  Bernabe,  Telecom  now  has 
a credible  chief  executive  who  has  articu- 
lated a sensible  value  creation  plaa  Tele- 
com shareholders  are  being  asked  to  vote 
on  tills  plan  at  the  weekend.  They  should 
back  Mr  R^-maha  and  not  worry  too  much 
about  Olivetti's  threats. 

Reed  Elsevier 

Great  idea.  ^gipalHng  execution.  Reed 
Elsevier's  move  to  a unified  management 
structure  has  been  embarrassing  bun- 
gled. Hopes  that  the  Anglo-Dutch  pubUsb- 
er's  nine-month'  search  for  a chief  execu- 
tive would  produce  a top  flight  candidate 
are  foding  fosti  the  univeixe  of  external 
candidates,  consisting  apparently  of  just 
some  10  chief  executives  with  relevant  US 
media  and  marketing  experience,  has  now 
been  thoroughly  trawled  over  and  the 
best  have  demurred 

Since  the  eiuef  executive  job  is  a nov- 
elty at  Reed,  candidates  understandably 
need  persuading  they  will  be  allowed  real 
power  to  unite  its  confederate  halves. 
This  week's  resignations  of  two  Dutch 
board  members,  highli^tiog  the  them- 
mid-us  culture  stQl  prevailing  seven  years 
after  the  meiger.  wiO  not  help. 

So  Reed's  (gitions  are  now  narrowing.  It 
could  go  down  the  Cable  and  VTireless 
route  and  settle  for  a safe,  but  dull  inter- 
nal candidate.  *niat  looks  unpromising: 
the  Itading  executives  from  both  sides 


CONTENTS 


News 

Baapean  Hem 

2.3 

8 

Features 

EinoriBis 

17 

H.— 18 

s 

ia-i4 

4 

17 

6 

19 

UK  News 

..... 10.11 

1R17 

Weamer 

18 

Crossword  Anzto _. 

30 

Companies  & Finance 

Eurapm  Company  News .....  2Q 

ASa-tadflc  Company  News  24 

American  Company  News ....  22 

WeiiiaiaBi  Cmtai  Marteti 28 


Mailcefs 


Pre-mdependenee  East  Tbnerese  in  shock  after  bsfeip  attaoksd  tai  tha 

town  of  Liquleaty  supporters  of  Indonesisn  rate.  Portugal  has  oiled  Cooimoditas 

for  United  Nations  intervention  in  its  former  colony.  Pirture:  AP  FTSE  GaU  Ifinec  Mu 


Bold  tubres  and  options 

......  a 

28 

Slot  term  Maiest  cates 

29 

28 

99 

Money  imfrets  — 

...  29 

FTlSUHi  World  indices 

37 

. 27 

WWtd  stock  inartals  reports ..... 

.....40 

Wtau  slock  maiket  Oslings  ..... 

37 

London  diais  sendee  .. 

. 34.36 

FTSE  Debates  UK  share  baices 

36 

...  36 

OMdends  amunced,  UK 

28 

Managed  tunds  service  — 

31-33 

Commodities 

....  30 

FTNANCLAiltl.VIES 


Directnry  of  onAie  services 
via  FT  Electmtic  PubTishng 

FTsor  M RnsieW  Itna  we  SW  oAs 
new.  conwnt  as  asrwB. 

Uw  tatal  fciahi.  m wiy-uw  tsam 
•wy  d onr  U amon  sfctM  fnni  Os  FT  Bd 
tram  lhawsdi  tf  eOMrfeaSo  netsowsr  ad 
tesresB  puaaCBra. 


aeHiasoilsUL 

wsisa  1«u  ituJSii 

FT  Mwd  Apoli  farWes  scne  Mata  d 
OTirt  « Menm  tepaw  and  KcaiW  sM2D0 
uepfes 

FTWawOnosy 

«ax/WmJtc9ntSaSlasyJBff 
C^Ww  isw  tepS  chse  pnsei  sd  ukitet 
lepott  W sd  tstfsek 

iiar/AmnuuBmiWKf^Ktirajm 
Sawia  wow  d tetBonSq  eSttta  anew- 
wwr,ftuiiiiswiisw'"W./aB 


FT  WEATHER  GUIDE 


Europe  today 

Italy  will  have  showers  and  local 
duinder.  The  eastern  Balkans  and 
Greece  should  be  sunny  but  the 
western  Balkans  will  tun  showery. 
The  Iberian  Peninsuiar  uriB  be 
sunny  but  paatchy  rain  vnn  affect 
northern  Spain.  A weak  front  wM 
bring  drizzly  rain  to  western 
France.  Eastern  France,  the  Low 
Countriee,  Germany.  Austria  and 
Sivieeriand  win  have  sun  and 
showers.  Scandinarta  win  be  fine 
and  bright 

Ffv&Klay  forecast 

Italy  and  the  western  Baians  wfll 
be  unsettled  and  Greece  and  the 
eastern  Balkans  wID  become  show- 
ery. The  western  Mediterranean 
and  north-west  Europe  will  be  fine 
and  v/arm  tomorrow  and  Saturday 
but  me  settled  the  weather  wW 
break  on  Sunday  and  Monday. 
Northern  Britain  and  Scanettnavia 
Virifi  have  rain  followed  by  brighter 
corfoiOons. 


. iA. 


SUtaUan  at  mMay.  T^atpenttaas  matiimuiv  for  day.  Foneasts  ty  TS  ^fEATHERCENTRE 


TOOArSTEMPBlATURES 

Cm 

Far 

Sana 

a 

•M 

MbUuuiib 

BaROlana 

Far 

U 

CnM 

acn 

Mr 

14 

CMus 

Baling 

Ctoud|r 

21 

riB*linca 

Sm 

24 

AtiuDh^ 

Accra 

Stfi 

Fair 

2S 

33 

BeKsa 

BWgrada 

SHOtW 

Sin 

13 

19 

Chtejgs 

Catogm 

Far 

SMwor 

17 

12 

Algfer* 

4iisRiil3n 

Far 

' 19 

Borin 

Orzzl 

12 

Mw 

Swi 

24 

Far 

12 

BmiMli 

Siami 

a 

Mte 

Swi 

a 

Airusn-i 

Sun 

20 

BogM 

Thmdar 

10 

OtOh 

Bin 

3* 

Atl«nu 

Fat 

ett 

Bomtay 

' Sin 

33 

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Swi 

29 

8.  Akpo 

Snoiwr 

20 

&uuels 

Shown 

12 

OuhWi 

Far 

14 

e.^a^" 

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Budflpeoi 

Showtr 

19 

Dubravnk 

Swm 

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Bjnetoi 

Shontr 

33 

CJn^ 

Par 

11 

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Sruwn- 

13 

Fm  Sm  S3  MMfttd  Fm-  Z2 

rVanKid  ShoMv  MaisRa  For  17 

QaoM  9 Wan  Sua  ts 

Odratar  sun  2S  ttochuHor  Cluiidy  15 

GMBggw  Shower  V Mania  Si»i  33 

Hanttwe  StaMv  I2  UaDaoumo  Fdr  SO 

H«is>na  Far  6 Ueucs  Cty  Sin  29 

HeoQ  Issng  PSr  X KLjtit  3S 

NonoWu  2B  Mftn  STMee  1$ 

lennM  Sin  1S  UwWeui  Rwt  I7 

Jatana  Pw  3i  Moscow  Run  8 

Jtnoy  Far  13  Minnii  Ran  8 

Jutwnwb-jte  Fan  2S  Kwoai  INnOn  7T 

Kaaelb  Sun  33  Njpia  Slower 

MimK  Sin  !9  Kassti  Sun  38 

UAfi^eie  Shevnr  T6  NowVorli  fat  3S 

Lm  Pa^na  Far  22  Nioo  Pv  18 

UsRA  Sm  37  Hecsia  fan  si 

LiKcn  Sun  25  Qdo  Far  ll 

Far  16  ftns  F*-  w 

LukJtewg  Shower  ]i  Perm  Sm  28 

Mnn  Showw  11  Aapn  Akn  10 

'tadara  Pair  2i  Ran»Kn  Fa  X 


Rie 

Ra>r« 

& Fnoo 
SeoU 

anQirn'u 

StDEllh^ 

SoeaMwg 

S»Onr» 

Tol  Awl 

T0b)O 

Toronio 

VaPooAc 

\Anea 

viwra 

W«90W 

W.islwgen 


Ron  5 
For  7T 
Snow*  17 
Show*  10 
Sm  IS 
F»  3S 
fm  s 
Ooucy  12 
Show*  az 

Sin  24 

Fw  a 

Fw  IS 
Far  11 
• 

Show*  1$ 
Show*  12 
Shew*  13 
Sm  a 
awwo  19 
fa  11 
Shs*0f  9 


Chinese  entry  to 
US  interest,  says 


have  loDg  appeared  semi-detached  and  the 
overriding  priority  is  for  fresh  blood  to 
transcend  national  squabbles. 

A seocind  option  would  be  to  emulate 
EMI.  lowering  its  sights  to  out-of-sector 
executives  of  mid-sized  companies.  This 
would  be  deeply  uninspiring. 

So  U is  h^ly  surprising  that  some 
Reed  shareholders  are  tempted  b>*  an 
injection  of  Wolters  Kluvrer  managetaept 
in  a rev*erse  takeover.  The  trouble  is  that 
Reed  and  Elsevier  would  have  to  give 
Wolters  a far  larger  slice  of  ebe  pie  than 
proposed  in  1997.  Instead  of  27  per  cent. 
Wolters  could  now  claim  nearer  40  per 
cent.  That  is  the  price  to  pay  for  a lack  of 
leadership. 

Revlon 

Long  In  need  of  a makeover.  Revlon  has  | 
finally  admitted  as  much.  Tire  cosmetics 
group's  decision  to  review  its  “strategic  I 
^tematlves”  sent  the  shares  up  15  per 
cent  yesterday.  They  have  risen  65  per 
cent  since  bid  speculatioa  grabbed  them 
three  weeks  ago.  Even  so.  still  lan- 
guish 60  per  cent  below  last  summer's 
high,  when  an  earnings  coUaise  stripped 
them  of  their  gloss. 

A takeover  now  could  look  weD-timed. 
tberrfore.  Revlon  has  a good  brand  name 
and  23  per  cent  of  the  US  colour  cosmetics 
market  - eye,  tip,  face  ami  nah  make-up  - 
just  behind  L'Oreal  which  owns  Maybel- 
Uae.  Intense  competition  and  a lack  of 
new  products  have  cost  the  highly 
indebted  group  market  shaie  and  profits. 
But  a deep-pocketed  parent  could  quickly 
put  that  ri^L 

Best  of  all,  Revlon  is  going  cheap.  With 
a current  enterprise  value  of  SSVsbn,  two- 
thirds  of  which  is  debt,  it  Is  trading  on  10 
times  forecast  1999  earnii^  before  inter- 
est, tax,  depredation  and  amortisatioa.  or 
0.5  times  price  to  sales. 

Recent  industry  transactions  have  aver- 
aged U2  times  ev/ebitda  and  1.7  times 
price/sales.  For  Unilever.  Procter  & Gam- 
ble or  Johnson  & Johnson.  Revlon  would 
be  an  easy  bite. 

The  crux  is  whether  Ronald  Perelman. 
the  flnander  who  controls  83  per  cent  of 
the  stock,  wants  to  sell  the  jewel  in  his 
empire.  To  date  be  has  preferred  piece- 
me^  restructuring.  But  with  his  stake 
having  halved  in  value  in  nina  months  he 
may  now  be  open  to  offers. 


^ Stephen  FUler  n WtaMngkm 

Prudent  BQl  Clinton  yesterday  said 
China’s  entry  to  the  World  Trade 
Organisation  would  be  in  US  inter- 
ests. as  expectations  rose  in  Wa^- 
ington  that  n^otiators  would  reach 
an  accord  to  pave  the  way  for  Chi- 
na’s WTO  membership. 

US  and  Chinese  negotiators  were 
still  hoping  to  settle  differences  over 
an  agreement  allowing  US  compa- 
nies increased  access  to  the  Qunese 
market  in  time  for  a meeting  today 
in  Washington  between  Zhu  Rongji, 
the  Chinese  premier,  and  Mr  Clixt 
ton. 

In  a hastily  arranged  speech  on 
China.  Mr  dinton  said  the  US  had 
an  Interest  in  integrating  China  into 
the  world  trading  system  and  in  see- 
ing it  join  the  WTO  on  “clearly 
acceptable  commerdal  terms". 

“The  bottom  line  is  this:  If  China 
is  willing  to  plaj’  by  the  global  rules 
of  trade,  It  would  be  an  inexplicable 
mistake  for  the  United  States  to  say 
no,"  Mr  Clinton  said. 

He  said  aOowing  Chinese  entry  to 
the  WTO  would  not  be  a favour  to 


rhlna,  but  that  it  would  allow  US 
omipanieB  broad  access  to  CSiizia’s 
markets  “while  accelerating  its 
internal  reforms  and  propelling  it. 
toward  acceptance  of  the  rule  of: 
law". 

Mr  Zhn,  speaking  in  Los  Angeles 
on  Tuesday,  said  tiiere  had  been  a 
breakthrough  in  n^otiations  over 
agricultural  trade,  with  China  agree- 
ing to  lift  a ban. on  wheat  Imports 
from  seven  US  states  and  citrus 
products  from  fonr  states.  The  Cbd- 
nese  premier  is  on  a nine-day  visit  to 
the  US. 

US  ftfflHala  said  that  While  differ, 
ences  in  a number  of  areas 
remained,  some  trade  experts  on 
Capitol  IfiU  expected  an  annoance^ 
ment  today  of  a market  access  deaL 

The  administration  has  empha- 
sised that  it  needs  a commerdaHy 
acceptable  agreement,  not  least 
because  it  requires  the  becking  of 
Congress  to  allow  normal  trade  rela- 
tions - formerly  known  as  most 
favoored  nation  status  --  to  be 
granted  to  China  cm  a permanent' 
basis. 

Trade  relations  are  renewed  ai^u- 


ally,  resiiitbig  in  r^i^contcora^ 
ovs  UB<llfiha  rdatibbs; 

Mr  Cliston-s.^peech  eou^t  tot^ 

' hne  the  reasons  for  ddntind^.US  - 
' ei^iagenient-with  Qdhaantidconl^' 
versy  over  human  limits;;  .tite  sdl^Biad 
theft  of  US  .nucl^-  secrete 
and  tbs  buOd-im  M ffo&eae  gnydlw- 
neartim  'ikdwan  8tndt..  -%;  : ^ , 

Be  chose  to  tbcus  'iii^^^t^d^ 
gers  a strong  China  ndgfti'-pose'fo'. 
the  -US  - the  tbi^t  'm6st..ofteq. 
esnphasised  by  conMvvativ^critiis  y- 
but  on  the  challenge,  pd^d- 17  -a' 
.weak  (CSiuia  “beset  by  fbitehiat.ean- 
Oicts^.-suehts  sodal  dtekkatim  ghdr 
crindnal  activi^.  • S-  .'” 

He  warned -tbeie.viw  a.j^  ;that- 
hesi- year's.  US  presidential  elecQb^ 

wmild  lead  fai  a . 

^ven  coU  war”  vdlh 
This  vrouldr.  he  sal^.haw^ 
consequences"  tb^'we^  bcme&  oo- 
one  “except  for  the  mosfr.ttevl  baiS^ . 
ward-looUng  elements  in  Ch^a 
,ite^,.  . ■ 

naft  M Fage  .S';^  ^ 

CMna  xanBBg  pledge,  Pqs  4 > - 
Gblite  Teleconi  24 


Developing  nations  face  sl6w 
growth,  warns  World  Bank 


I By  Robert  Cfiote 
. Enanoyes  EdRsr 

' Weak  world  trade  growth,  falling 
commodity  prices  and  a lack  of 
external  finanr^  will  condemn  d^el- 
opiiig  countries  to  their  lowest  rate 
of  economic  growth  since  1982  this 
year,  the  World  Bank  said  yesterda>’. 

In  Its  annual  Global  Deralopment 
Finance  report,  the  bank  lowered  its 
forecast  for  economic  growth  in  the 
developing  countries  to  1.5  per  cent 
this  year  finm  the  2.7  per  cent  it  had 
predicted  last  October.  Growth  is  not 
expected  to  return  to  its  loog-tenn 
average  of  4A-5  per  cent  before  2001. 

“Although  the  risk  of  a deep 
global  recession  has  receded  in 
recent  months,  the  alsis  in  emerg- 
ing markets  is  likely  to  be  deeper 
and  more  prolonged  than  earlier 
assessments  had  suggested."  it  said. 

In  the  deterioration  reflects  a 
gloomier  outlook  for  world  trade, 
with  growth  having  more  than 
halved  since  1997  to  an  estimated  4.3 
per  cent.  Meanwhile,  the  price  of 
non-oil  commodities,  an  Important 
source  of  revenue  for  many  ^velop- 


ing  countries,  fell  by  16  per  cent  last 
year  and  is  expected  to  drop  anotiier 
6.3  per  cent  this  year. 

These  factors  will  reduce  export 
earnings,  implying  a greates  need  tor 
external  finaoitt.  But  the  critas  of 
the  past  two  years  have  meant  thM 
the  supply  ct  investment  funds  for 
emerging  maikets  is  smaller  and  Qie 
cost  of  borrowing  higher,  forcing 
squeezes  on  domestic  tqiending. 

‘«nie  deteriorating  external  envi- 
ronmoit  has  btoogid  domestic 
weaknesses  into  sharper  focus, 
incluHlag  ghitipfo  deficits  in 
several  large  develcmhig  cmintries. 
the  need  for  corporate  and  ffgainiai 
restructuring  in  many  Asian  econo- 
mies, and  dvil  or  onss-border  con- 
flicts in  Europe.  Asia  and  Africa," 
the  report  says. 

The  hanif  eaqpects  the  worid  econ- 
omy to  grow  1,6  per  cent  this  year. 
The  US  economy  is  forecast  to 
eqtaud  3.1  per  cent,  but  with  domes- 
tic demand  fuelled  by  stock  market 
^ins.  “That  does  not  look  to  us  like 
being  a healthy  situation."  said 
World  Bank  economist  Uri  Dadush. 

Net  long-term  financial  flows  into 


developing  countries ' fell  . from 
tSSSbn  in  1997  to  6270m  last  year. 
This  decline  was  dominided  by  flows- 
fitnn  inteniational  capital  martets:. 

K the  crisis  in  is  resolved, 
the  Bank  believes  that  flows  fnm 
international  capital  m^ets  may- 
recover 'steadily  over  the  next  few 
months.  Bat  witii  only  IS  emergiog 
market  economies  jetainlng  Invest- 
ment grade  credit  ratings,  capital 
flows  for  1999  as  a whole  are  stfll' 
expected  to  be  down  cm  last  year. 

In  the  face  of  this  decline,  foreirii 
direct  investment  flows  into  develop- 
ing countries  have  remained  rela- 
tively resilient,  falling  only  from 
gl67bn  in  1997  to  llffibn  last  yeu. 
The  deterrent  effects  of  recession  in  - 
many  recipient  economies  have  been 
oEteet  by  the  i^qiortiinity  to  make 
acquisitions  at  rock-bottom  prices. 

Foreign  direct  investment  has 
been  particularly  resilient  in  the 
Asian  econoinies,  except  in  Indon- 
esia. where  political  prxfolems  saw  it 
coDapse  from  mote  than  66bD  in  1996 
to  barely  Slbn. 


AnaU/ak,  Page  5 


Rockmiell 

Electronic  Controls  and  Communications 


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With  Rockwell  Collins  Communication  systems  for 
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hnp://www.rockwell.com 


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GO  PUBLIC 

Jn  ihe  Initcd  St;iTc*i 


«f  becoming 


FINANCIAL  TIMES 


raaiav  toaised  in  the  usT  ' 


Bui  don-l  wart  tobeUA  coip^^iS^^ 


COMPANIES  & MARKETS 


BUILDER 
CENTER 


O w nwcuLTues  LWTED  lan 


THURSDAY  APRIL  8 1999 


WMk  14 


INSIDE 


§|f|i 

oaiiiv 


Europe  merger  levels  at  new  high 

• The  levels  erf  European  mergers  and 

***“*^¥l!?«J*’*i.?®*  quarter  of  iggg  leapt  to 
4 record  $3456(1  TTte  prsvk^  record  had  been 
I $19a3bn.  The  latest  period  also  savv  rnS^ 

2.700  deals  compleled.  Page  22 

Gtx^^ia  Shares  stm  foil  to  sparkle 

CocsK^'S  shm  have  languished  for  two 
ystts  without  <s^n  of  ifr^^roviriQn  L^st  yssr  ssw 
dnetrf  Rs  worst  share  performances,  manaotna 
a 0.5per  cent  ^ against  a 16  per  cent^  ih 
the  Dow  Jones  industrial  Average.  Page  22 

Hassan  pidls  P & u back  from  brink 

pred  Haasan  came  to  Pharmacia  & Upjohn  In 

May  1997"  to  rescue  the  struggTing  pharmaceutl- 
cab  group.  By  last  year  he  had  achieved 
double<i^  earnings  growth,  artd  the  sham 
price  recently  reached  a high  of  $63^.  Page  25 

fonianfo  offers  golden  tax 

The  Romanian  government  is  keen  to  persuade 
foreign  iriirestors  to  explore  for  gold,  and  eo  the 
jMlii^  Resources 

eeriesdfetqsibfation  licenees  carying  substan- 
tial tax  concessions.  Commodes,  Page  30 

Cathay  owns  up  to  a cut  too  far 

Oatttay  Pacific  has  fourtd  that  its  cost-cutting 
maasurns  have  made  it  hard  to  maintain  stan- 
dards, and  the  airline  group  admits  the  econ- 
omy drive  may  have  been  overdone.  Page  24 

Copenhagen  lonely  outside  euro 

Over  the  last  three  months,  only  emerging  ntar- 
ksts  have  fared  worse  than  Dan^  stocks,  with 
Copenhagen’s  AH-Share  index  dr^iping  4.6  per 
cent  and  the  KFX  blues:hip  index  off  6.5  per 
cent.  Analysts  blame  tfie  position  outside  the 
euro^zon^  poor  economic  growth,  a fail  in 
^Kkisbiaf  COTip^tiveness,  high  labour  coats 
and  a strong  currency.  Market  Focus,  40 

Matsushita  enters  mobile  maricet 

Matsushita,  the  Japanese  eldctionlcs  groupi 
tfms  to  strengths  Its  tetecommunications 
equipment  busbress  by  entering  toe  moUle 
MMne  base  station  rnarktt  arKi  atoreeslrig  Its 
rharket  share  for  handsets.  Page  24 

Uffe  posts  rise  in  futures  volumes 

Commodity  futures  volianes  on  the  London 
International  FlnanciM  Futures  and  Options 
Exchange  rose  27  per  cent  during  the  first 
quarter  of  1999.  Commodes,  Page  30 

Sushlid  acquires  small  stake  In  GM 

Japan’s  SuzuM  Motors  has  acquired  a small 
stake  in  General  Motors,  toe  car  and  truck 
maker.  Suzuld  also  has  an  agreement  with  C^ret, 
GM’s  Germany-based  subsfcSary.  Pago  22 

South  Afrfca  sy^  foistralfon  assets 

The  bid  by  Disban  RoodepqortDeep  fiXlD),  the 
Johanrieaburg-baed  gold  mining  corripany,  lor 
Australia's  Emperor  Mines  W the  latest  sign  of 
toe  growing  entousiasrn  for  Ausiraftan  assets 
4mong  Souto  African  groups.  Page  2D  . 


^ COMPANIES  IN  THIS  ISSUE 


ireli 


i 


Abbey  Nattonal 

38  Iscor 

20 

f.  AMcWest  Gold 

20  J.  P.  Moisen 

30 

Horn 

22  Kingfisher  ' 

" 36 

. fKC  ■ 

2M6  Kvaamer 

20 

fer 

19  LQTetocom 

19 

Bkpiceis  frust 

24  Lucas  VMty 

20 

BameyW 

19  MaWoridCom 

19 

. BvMainenn 

22  MacAn&vwHFoibes 

19 

Bktoieng 

19  Msriw  and  Spencer 

96 

22  Mwval  Enbertaininent 

19 

CtotoancrWMeBS 

19^  Mrisushtta 

24 

. 'CMonCamns. 

38  Metro  Cash  a Carry 

20 

- ffwtayPaeite. 

34  Morgan  Kantoy 

20 

pbiwTetacofn 

24  CMmtti 

19 

Oocfr4>]|e 

22  Otto  Vorsand 

29 

iScwoBdeted  Cioar 

19  PCIBank 

24 

1 

4 PNB 

24 

§n^:, 

SO  Pearson 

20A6 

. 20  Pepkor 

90 

^ baatscheBarrii  - 

24  PepWCo 

22 

' pkMbe  Conoepts 

19  Procter  & Gamble 

19 

btniMiiiori  Data 

20  ReedBsevler 

29 

. . '{3qh  jonaa&Co 

. 90  BeedlnH 

36 

22  Fte\4on 

19 

- iM&to  Roodepobrt 

20  STDiflXxrt 

19 

SO  Schreders 

20 

Bitoto^Chfe- 

.22  Seagram 

22 

pvfoiaSpwn .. 

22.  Shames 

19 

■ : 

22  Strigapora  Afrfoes 

24 

fiihceTcMeern 

20  SmarTone 

19 

' Fwanwne  - - 

26  StMdaid  Charterad 

36 

36  Surriseem 

19 

tomnlCMIa 

26  SuaM  Motors 

22 

Gan^ltotor 

22  TRW 

20 

SitebwTT” 

aO.Tbfcieom  KaRa 

19 

- foridrariSadis  ' 

'20  Telewest  cbmms 

3B 

HMftx':- 

36  Tnor 

to 

2D  UnVever 

■ 19. 

19  Wataas  Mon  Beed 

» 

fflj' 

24  waesafi 

M 

CAOSSWORD,  Page  30 


; MARKET  STATISTICS 

***“*«*  S “ 


Mfuhmnlapllins 
BttdtrkttMfiBkls 
CtanioAiBs  prices 
MOMaiioinCBd,.UF 
Secarbicyrtts 


» 

2B 

31,85 


ewprices 

ijodoadMWSBnW 

ftintt  savlce  3i-« 

28 

as 
a 


R/SSP-AVMct  indices 
FISEtoMMbas  bides 


2 MoosynwWB. 

» NeeWiMnaiwes 

” Recent  ksaes.  UK 

2B  BheHerm  H Abs 

28  aOCHllW*«h®t*Sh«S  * 

S7  uswwdiaee  a 

86  Wttld  eiDdc  ” 


Reylon  group  considers  disposals 


By  Andrew  fidMifc-johnson 
tai  New  York 


Takeover  hopes  boost  cosmetic  group 


Revlon,  the  cosmetics  ^t>up 
behind  brands  such  as  Color- 
stay  and  Altnay,  coofinned 
yesterday  that  it  was  consider- 
ing disposals  ibllovlng  weeks 
of  spei^tlon  about  a $3i»' 
plus  takeover. 

News  that  the  groop  *»*h 
appointed  advisers  “to  under- 
take a review  ci  strategic  altei^ 
natfves"  fuelled  hopes  of  bid- 
ding interest  from  consozner 
products  groups  tneinding  Uni- 
lever, Procter  & Gamble  and 
Johnson  & Johnson. 

Revlcm’s  ^ares  rose  43^  to 
by  luuchtiine  In  New 
York,  valuing  the  group’s 
equity  at  Sl.lbn,  Any  bidder 
for  the  whole  group  would  also 


have  to  take  on  more  than 
S2.3bn  of  debt.  ■ 

n>e  decisioD  to  octnaidw  the 
sale  of  “one  or  more  busi- 
nesses* is  thought  to  have 
been  made  by  Ron  Perelman, 
the  financier  who  ooatrols.as 
per  cent  of  the  company's 
stock. 

A coDapse  in  Revlon's  share 
INioe  last  year  eoiaefajed  w& 
tronble  at  other  Perelman 
investments.  Including  Siin- 
beam  Q^r. 

UacAndrew  A Forbes,  Hr 
Perelman's  private  bolding 
company  whl^  bou^t  Revkm 
In  1986.  took  the  «^^**npwT,y 
Be  three  years  ago  at  $24  a 


share.  In  the  same  year,  Mar- 
vel Entertainment,  another 
Perelman  company,  went  Into 
banknmtcy. 

Analysts  said  yesterday  that 
Unitever,  which  owns  Eliza- 
beth  Arden  and  Calvin  Klein 
cosmetics,  would  find  a diffi- 
cult to  TwaV*  BnaTiMa>,l  Qf 
a ftiU  takeover  of  Revlon.  Proc- 
ter & Gamble,  they  added, 
could  struggle  to  buy  the 
wbdla  company  because  of  the 
regtzlatory  concerns  about  the 
overlap  with  its  Cover  Girl  and 
MavPartftr  brands. 

Carla  Casella  and  Steve 
Ruggiero,  fixed  income  ana- 
lysts at  Chase  Manhattan,  said 


Iriecemeal  disposals  could  get 
around  the  problem  of  ov»lap- 
ping  product  lines. 

Th^  identified  three  poea- 
ble  nonoore  candidates  !br  dis- 
posal: Revlon’s  professional 
laoducts  boeiness,  eddeh  selte 
to  salons;  its  personal  care 
division,  which  sdte  deodorant 
and  Flex  hair  care  products; 
and  its  Charlie  fragrance  oper- 
ation. 

These  businesses  accounted 
tor  almost  $ibn  of  the  group's 
$225bn  turnover  in  1998,  but 
analysts  said  the  structure  of 
the  company  would  allow  for 
other  pennutatlons. 

Revlon  has  hired  rvtMiwn 


Sachs  and  hazard  Frtres  to 

advise  it. 

Revlon’s  shares  sank  as  low 
as  $12^  last  year,  after  it 
warned  of  a coDapse  in  third 
qnaiter  aaniings. 

The  company  weak 

ig  itttwrmHnTial  iQar- 

ketfi  such  as  Russia  BrazQ 

smd  cuts  in  inventozles  by  the 
large  drug  store  chains  in  the 
VS. 

In  January,  it  unveiled  a 
major  restmetming,  saying  It 
would  take  $8(kn  in  chaiges  to 
cover  1,200  job  cats  from  its 
14,000-6trong  workforce  and 
other  measures  aimed  at  sav- 
ing $lSm-$20m  this  year  and 
$30in$40m  a year  in  the  longer 
tenn. 


lex.hge1B 


Cable  and 
Wireless 
sues  MCI 
over  net 
purchase 

ByHuCane 

Cable  and  mtHess'  hopes  of 
suhstantial  growth  from  its 
newly  acquired  US  internet 
business  were  dashed  by  the 
failure  of  the  vendor.  MCI 
WoiidCoffl,  to  abide  by  the 
condhicios  of  the  apbi,  the  UK 
group  alleged  in  a lawsuit  Sled 
last  week. 

Ihe  lawsuit,  put  farfore  Dela- 
ware District  Court,  claims 
C&W  wiB  lose  signffirant  reve- 
nues arm  profits  this  year  as  a 
result  of  the  US  operator’s 
actions.  C&W  says  an  average 
of  64  new  customs  a memth 
signed  up  for  the  service 
between  October  and  Decem- 
ber after  R acquired  the  bu^ 
ness,  oozupar^  with  242  a 
Humto  whmi  it  was  still  owimd 
by  MO. 

Last  July.  G&W  paid  $L75bn 
for  MCTs  US  internet  business. 


Hffi  was  forced  to  dispose  of 
the  hnsiness  - beedtoone  net- 
work eeivice  providere  and 
customm's  - by  r^ulators  as  a 
oondfiton  of  the  deal  whkdi  led 
to  the  qnatlQn  of  MCI  'World- 
Com. 

C&W  moved  quickly,  com- 
pleted the  pundit  4^  cele- 
brated at  having  achieved  at  a 
stroke  membership  of  the  top 
tier  of  internet  operaton  with 
spedal  laivQeges  and  acoem  to 
Ehrmeands  Of  quality  COMmO- 
ers.  Riciiaid  Browxii  chief  exec- 
utive, said  it  had  '^bought  the 
ftatore". 

But  the  lasnuit  ffiat 

ISCfi  WorldCom’a  actions  since 
the  sale  had  cost  it  bondreds 
of  cosbnners,  lesoiting  in  reve- 
nue losses  worth  tens  of  mO- 
JiODs  of  doQars.  A3sOk  C&Ws 
r^nitation  to  hmh<tolity  ser- 
vice had  been  Injured  and 
opportunities  to  otiss-sell 
C&W  products  to  its  new  cus- 
tomers had  been  lost.  It  said. 

C&W  is  demanding  that  kTCI 
WorldCom  meet  its  obUgattons 
under  the  sale  and  is  seeking 
unspecified  damages ' for 
aTjegad  breedi  of  oontract. 

MCI  WorldCom  confined 
itsdf  yestmday  to  saying  that 
it  would  vigorously  defend  the 
action  which  was  *wltbout 
in«4t". 

C&W  alleges  that  MCI 
WorldCom  waned  C&W*s  new 
internet  costomers  to  expect 
degradation  in  their  service 
and  to  discoQoect  from  the  UR 
company- 

It  says  dm  US  grcnxp  failed  to 

identic  a agnlficaiit  number 
of  Its -internet  customers  to 
C&W,  ’’many  of  whom  have 
complained  publicly  .about 
lads  of  attention  frmn  C&W, 
before  C&W  was  made  aware 
they  were  custmnma’’- 

Tbmu  are  comidaints  about 
MCI  WoridCmn’s  eHe^  foil- 
ure  to  ttahsftf  internet  staff  to 
C&W  as  reqitired.- 

Only  41  sales,  people  were 
offered,  for  example,  rather 
than  324  C&W  ejected,  while 
only  18  out  of  55  business 
marketeers  wwe  transferred 
and  only  one  of  49  pec^fo 
needed  for  billing-'  C&W 
aOeges  MCI  WorldCom  failed 
to  provide  any  experts  in  antt- 
^gtoming -■  the  prevention  (tf 

gnwanted  electronic  man 

MCI  WorldCom  was  dtf  dent 
in  billing.  C&W  alleges,  saying 
the  group  sent  many  bills  late 
and  to  the  wrong  address 
-When  Ma  WorldCom  fbaaDy 
dkl  send  out  bills,  they  were 
f^tete  with  errors  - frequently 
jijar  to  five  errors  on  a sln^e 
MU.” 

C&W  said  yesterday  that  it 
was  still  keen  to  reach-  a 
“negotiated  settlement”  with- 
ont  goii^  to  court. 


Shake  up  at  Dickson  Concepts 


Hong  Kong 
group's  shares 
are  suspended 
ahead  of  deal 


By  LfldiBe  Lneaa  In  Hqiib  Kong 
and  Peggy  Hoffiogsr  in  Laattaa 


Trading  in  lUekson  Concepts’ 
shares,  the  Wowg  wong 
luxury  retailer  which  owns 
Harvey  Mehols  in  the  UK,  was 
suspended  yesterday  ahead  of 
a todor  deal  to  be  unveiled 
today. 

TTie  group  is  understood  to 
be  planning  to  annonnee  a 
broad  restracturmg  which 
conld  see  a chan^  in  owner- 
ship. but  not  nWmatB  omtrol, 
ai  Dickson  Concepts’  52  pm- 
cent  stake  In  Harvey  raduds, 
the  quoted  luxury  domtiaent 
stme  ^Qup. 

Dickson  Concepts  said  the 
azmouncement  related  to  a 
major  transaction  ’‘disposing 
of  its  nosi-Asan  «Twt  a 
partial  cash,  aifer  -for  the 
shares  to  the  oanmany  is  also 

being  fWitemplfitail" 

Analysts  are  expecting  some 
assets,  incldding  Harvey 
IScboIs,  in  west  London's  faah- 
ionaUe  Eni^tistoidge  district, 
win  he  shunted  Into  private 
companies  owned  by  tte  fom- 
Qy  of  DickBoa  Food,  chairman 
and  nutior  shareholder  of  the 
retailer. 

Harvey  Nictols  was  pur- 
chased by  Dkkson  Concepts 
for  £Slm  <$82m)  to  1991  and 
tnmHbnned  fitan  a strugi^lng 
dqnztmaif  store  into  a boo 
cesCol  mnltl-site  retaQer  and 
restaurateur.  It  ts  one  of  Dick- 
son Concepts’  more  profitable 
operations. 

Although  the  recent  sharp 


WlTKfcm  shopping:  Sttarae  hi  Htarrey  Mehab  hare  riven  by  0Q  per  cant  alaw  Deowatar 


MefcGtn  Watson 


slowdown  in  UK  consumer 
^)eodLQg  has  affected  the  Hai^ 
vey  Nichols'  profit  expecta- 
tions, relatively  resilient  sales 
have  helped  the  shares  to  rise 
by  more  than  60  per  cent  stooe 
December. 

Dtoson  Poooi’s  private  com- 
panies have  been  used  to  make 
investments  such  as  the  I99T 
HKgSOOm  (639mJ  purchase  of 
Sblntniw,  a fiahion  retailer  and 
distrfhutor  in  Hong  Kong, 
‘Ibiwan,  Singapore  and  Indon- 
esia. 

MorecFver,  a fan  sale  of  Har- 
vey Nichols  would  Jar  with  the 


group’s  ambitions  as  a global 
retailer.  Those  ambitkms  have 
already  been  thwarted  by  the 
failure  to  acquire  Barney’s,  tbe 
US  department  store  which 
filed  for  bankruptcy  to  2996. 

Meanwhile,  ST  Dupont,  tbe 
French  luxury  goods  company, 
sufiered  badly  firom  the  Asian 
finanrfal  cil^  SCd  Ite  profits 
last  year  shiank  83.6  per  cent 
to  FFS-Sto  (gL6m)  lowmlng  the 
odds  of  a successful  sale. 

Analysts  suggest  that  Dick- 
son Concepts  coold  aeU  tbe 
Harvey  Nidiols  building  and 
lease  it  bax^  Some  estimate 


tbe  pruperty  could  be  worth 
more  than  Harvey  Nichols' 
market  value  of  noDm. 

Other  brokers  are  not  ruling 
out  a move  to  take  other  parts 
of  Dickson  Concepts  private, 
pointing  out  tliet  trading  in 
tbe  stock  has  languished  to 
recent  months,  bar  a brief 
flurry  cf  activity  last  month. 

Dickson  Concepts’  strong 
Asian  exposnre  and  mostly 
bi^  price  tags  made  it  vulner- 
able to  tbe  regional  crisis.  It 
has  waned  that  a Ices  for  the 
full  financial  year,  which 
ooded  to  March,  is  IS^. 


BT  pays 
$386m  for 
20%  of 
SmarTone 


Qr  Alae  Cans  la  Leiiitoo 
and  Louise  Lucas  In  HcMig  Kong 


Brlti^  Tbleconununicatfons 
yestmday  added  to  its  pres- 
ence  in  tbe  Asia-Padfle  region 
by  paying  £240m  (USg386m)  for 
a 20  per  cent  stake  in  Smar- 
Tone,  Hong  Kong’s  third  larg- 
est mobile  operator. 

The  move  brings  ST'S  total 
investment  in  the  region  to  the 
past  six  months  to  mere  than 
£750dl  This  includes  tbe  pur- 
chase  of  a 33  per  cent  ludding 
in  Binariang.  a Malaysian 
operator  at  fixed  and  mobile 
services,  and  a 23  par  cent 
stake  to  LG  Tdecom,  a South 
Korean  mobile  operator.  Over- 
all, BT  has  more  than  a dosen 
Asia-Pacific  partner- 

ships and  joint  ventures. 

Alfred  Mockett,  president 
and  chief  erecutiva  of  BT 
Worldwide,  said  the  Smarifrme 
stake  was  a ‘'breakthron^" 
that  fitted  exactly  irith  Bt*s 
strategy  for  the  region.  It 
forms  part  of  tbe  company’s 
new  business  model  outside 
tbe  UK  iuvcdvtog  *00081  initia- 
tives with  glotei  credentials”. 
The  coDipany  is  sedch^  stakes 
in  businesses  locally  owned 
and  operated  but  connected  to 
the  vrtder  world  by  BTs 
netwooictog  capability. 

Mr  Mockett  said  the  aim  was 
to  influence  rather  than  ocn- 
troL  sod  to  particular  to  play  a 
part  to  the  appointment  of 
chief  teehnoI(^  officers  to 
ensure  BT*s  partners  used 
common  transmission  teito- 

■BT*s  Asia-Pacific  arm  wlD  he 
the  second  biggest  abarebolder 
in  SmatTbne,  which  has  just 
undo-  500,000  subscribezs.  Sun 
Hung  Kai  Properties,  the  Hong 
Kong  property  developer 
remains  the  biggest  share- 
bidder. 

KT  is  paying  HKS25  a share, 
an  11  per  cent  premium  to 
SmazThoe's  /?i«ang  share  price 
of  RKS22.50  on  1. 

Mr  BSockett  said  it  was  an 
opportunity  BT  could  not 
ignore  and  "one  window  of 
opportunity  into  mainland 
China”. 

SmazTone,  which  has  a turn- 
over of  HESUbn  to  tbe  year  to 
June  30,1998,  with  profits  of 
HKglbn,  is  one  of  six  mobfle 
operators  in  Bong  Kong. 

Bfr  Blbckett  added  that  BT 
had  spent  about  £3.5bn  on 
European  investments  and 
could  weD  sP^id  an  equivalent 
amount  in  tbe  Asla-Paei^ 
region. 


Observer,  Pegs  IT 


OKvetti  warns 
Telecom  Italia 
shareholders 


By  Pad  Btete  in  Mm 


Olivetti  warned  Telecom  Baha 
shareholders  yesterday  It 
would  make  them  “feel  sorry" 
if  they  decided  not  to  hack  its 
€60.4^  965bn)  hostile  tod  for 
its  much  btggor  Italian  tote- 
communlcatkms  rivaL 
Roberto  Colanlnno,  Olivetti’s 
chief  exeentive.  told  an 
extraordinary  shaitiiolders 
metotog  that  if  bis  bid  foiled 
Olivetti  would  mount  a com* 
petitive  assault  against  Tele- 
com Italia,  with  one  of  its 

main  gjmft  tO  Wtafca  TelecCTO 

Italia  shaiaboldeis  suffer. 

Mr  Colaninho’s  sabre- 
rattitog  came  as  Frraco  Ber 
nabe,  Telecom  ttaiia’s  chief 
exeentive,  hoped  to  woo  his 
shareholders  to  aj^irove  hia 
anti-takeover  daCmices  and 
todustrlal  strategy  at  a key 
noeettog  on  Sator^. 

privatise  tatecomaiam- 
cations  group  was  also  under, 
stood  to  be  eonadeii^  legal 
action  rigatost  Olivetti 
to  its.  rival's  disclosure  last 
.week  that  it  sold  'me- 

nnm  TfaTm  flfanmg  Jq  ngf- 

ket,  and  Its  aftotwlsl^  cam- 
pa^  aimed  at  Ttiecom  Italia 
ehareholders. 

Olivetti  has  written  to  sev- 
eral'Telecom  fiaiia  sbaraimld- 
era  th«a  to  r^ect  Mr 

Bemahe's  defona  plas.  In 
what  Telecom  Italia  legal 
adviseia  considered  a breach 
of  Raly*3  privacy  laws. 

With  the  takeover  struggle 
reachtog.a  climax,  the  two 
rival  sides  are  waging  an 
totsise  battle,  taktog  newspa- 
per' advertisements  in  an 
attenipt  to  swmg  Qm  outcome 
- whkdi  fina^ii^  aaaiysts  said 


remained  too  close  to  call- 

OUvetti  has  continued  to 
pn^ect  itsdf  as  tbe  new  face  of 
Italy’s  emergtog  free  martet 
capitalisin. 

But  tts  opponeits  accuse  the 
company  and  Its  chief  execu- 
tive of  foiling  to  "play  by  tbe 
. rules"  and  znlBr^uesenttog 
focts  to  inVastora. 

A Senior  investment 

hawlfar  fa 

tions  sector  dismissed  Mr 
Colanlnso’s  claims  that'  he 
would  bring  OUvetti^s  innova- 
tive telecommunications  sfiat- 
€gy  to  Tdecoa  Ralia. 

“Mr  Colatonno  bad  nothing 
to  do  with' telecom  strata  at 
Olivetti  as  he  only  became 
CTO  to  September  199^  when 
the  Ozzudtal  ceBoIar  business 
WHS  already  up  and  running 
and  the  infostrada  fixed  line 
venture  had  already  been 
sterted,”  he  said. 

Bto  Mr  Colaninno  confirmed 
at  yesterday’s  meeting  - 
ifbaih  tqjproved  a €2.7bn  Oli- 
vetti capital  increBse  to  help 
finance  part  of  tbe  bid  - that 
his  company  wanted  to  man- 
age Telecom  Italia  and  not 
merely  tov  a financial  stake. 

Olivetti  wanted  a nonimum 
stalm  of  35  per  cent  in  Teleixan 
Italia,  be  said.  Olivetti  also 
said  its  1998  consolidated  net 
profits  of  L248IH]  <M3?to)  were 
in  line  with  the  indications  it 
gave  last  year. 

But  without  one-time  gains 
from  the  Bale  of  a 12A  per  cent 
stake  in  Its  OUman  telecom- 
munications subsidiary  to 
Mannesmann  of  Germany  and 
deferred  tax  calculations,  the 
group  was  to  loss. 

13 


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financial  TIMES  THURSDA  Y APRlt.a  i?^^ 


EHGINEERING  FINANCE  CHIEF’S  DEPARTURE  PROMPTS  RE-ORGANISATION  OF  GROUP 


Kvaerner  executive  resigns 


COMPANIES  & FINANCE: 

FT  and 


'2? 


By  IMerfa  Skau  in  Osh) 


Kvaerner,  tbe  troubled 
AnglO’NorwegUui  engineer* 
ing  and  shipbuilding  com- 
pany, yestenlay  announced 
the  departure  of  one  of  its 
senior  escecutives.  paving  the 
way  fbr  a reorganisation  to 
be  announced  next  week. 

Jan  Magne  Hesrelund.  49, 
resigned  as  acting  chief 
financial  officer  and  chair- 
man of  Kvaemer's  S2.5bn 
industrial  products  group, 
comprised  of  pulp  and  'paper. 
Kvaerner  Energy,  and  the 
equipment  units  of  the  for- 
mer metals  area. 

Mr  He^elund’s  departure 
comes  as  the  company  is  In 
the  midst  of  selling  the  busi- 
nesses be  managed  and  pre- 
pares to  unveil  changes. 


RjeD  Almskog.  K%'aemer’s 
new  chief  executive  as  of 
December,  will  reveal  detail 
of  a r^cal  re-organisation 
of  the  company  next  week, 
which  will  exclude  industrial 
products,  as  part  of  his  plan 
to  return  the  company  to 
acceptable  operating  perfor- 
mance witbin  two  years  fol- 
lowing a NKrl.Tbn  (S2l9m> 
net  loss  last  year. 

The  market  had  expected 
Mr  H^gehind  to  step  down 
after  Mr  AJmskog  was 
appointed  chief  executive 
only  weeks  into  the  prior 
reoiganlsation  during  Octo- 
ber under  Erik  Tonsetb. 
Kvaemer's  former  chief 
executive. 

Mr  Tonseth  was  ousted  by 
the  board  ttiat  same  month 
amid  falling  profitability  and 


share  price  as  the  company 
struggled  to  rid  its  net  inter- 
est bearing  debt  inherited 
from  the  acquisition  of 
Trafalgar  House  in  1996. 

Last  year  Mr  Almskog 
revealed  plans  to  review  the 
company's  operations  and 
sell  additional  business^  to 
streamline  the  company. 

Kvaerner  is  in  talks  with 
Voest-Alpine  Technoiogie, 
an  Austrian  engineering 
group,  over  tbe  sale  of 
Kvaemer's  metals  equip- 
ment business  and  is  looking 
for  a bnyer  for  Kvaerner 
Energy's  hydro  turbine 
power  business. 

Analysts  are  expecting  the 
new  Kvaerner  to  be  smaller, 
but  similar  in  structure  to 
the  old  Kvaerner  before  it 
was  reorganised  by  Mr  Ton- 


seth. That  could  mean  possi- 
bly splitting  engineering  and 
construction  back  into  two 
areas  again,  while  retaining 
shipbuilding  and  oil  and  gas 
as  its  two  other  core  areas. 
Total  revenues  in  the  new 
Kvaerner  are  expected  to  fail 
to  about  HKi&Sbn.  compared 
to  NKrSSbn  last  year. 

The  announcement  of  tbe 
new  Kvaerner  comes  two 
weeks  later  than  planned, 
fuelling  analysts'  concerns 
that  the  company  is  consid- 
OTing  issuing  new  shares  to 
meet  interest  coverage 
requirements  on  loan  cove- 
nants. 

However  Kvaerner  said 
although  it  is  open  to  a 
share  issue  at  a later  stage 
there  was  no  need  fw  such  a 
move  now. 


WSJ  in 
Russian 
venture 


By -Mm  fiapper. 
Media  EdRor 


MERGERS  EUROPEAN  VOLUMES  INCREASE 


Deals  at  a high 
in  first  quarter 


Slovakia  to  sell 
Globtel  stake 


By  Robert  Anderaon  In  Prague 


By  IBcfnnI  K«Ba 


Tbe  levels  of  European 
mergers  and  acqvusitions  in 
the  fimt  qoarter  of  1999  has 
leapt  to  new  records,  accord- 
ing to  research  issued  yester- 
day by  tbe  Securities  Data 
Company. 

The  deal  flow,  which 
includes  Olivetti's  $77.9bn 
bid  for  Telecom  Italia  and 
the  two-pronged  bid  by 
Banque  Nationale  de  Pans 
to  acquire  Paribas  for  Sl9bn 
and  Soci6t#  GdnArale  for 
gl8.7bn,  totalled  a record 
g345bn  in  tbe  first  three 
months  1999. 

Tbe  previous  record  had 
been  $196.3bii  in  tbe  final 
quarter  of  1998.  Tbe  latest 
period  also  saw  more  than 
2.700  deals  completed,  which 
is  a new  volume  record. 

J.P.  Morgan,  the  intema- 
ticmal  investment  bank,  was 
the  leading  adviser  during 
tbe  period. 

It  was  involved  in  18  deals 
that  have  a combined  value 
of  $33.4bn  including  the 
takeover  of  LucasVarity  by 
HlW  for  yrbn. 

This  is  a leap  forward  from 
the  first  qo^er  of  1998 
when  It  was  ranked  sixth 
with  S10.3bn  of  completed 
deals. 

Klaus  Olederichs,  mauag' 
director  of  JJP.  Moigan, 
said:  *‘Altbouid)  it  is  only  thd 
first  quarter  of  the  year  we 


are  pleased  to  be  in  the  top 
three.  There  have  been  a lot 
of  very  large  deals  and 
people  are  only  coming  to 
those  with  the  machinery  to 
handle  it. 

“A  deal  in  Italy  *is  different 
from  one  in  Germany  and 
one  in  the  UK  and  so  on. 
You  need  people  with  eiq)eri- 
ence  who  have  built  up  a 
good  position  to  complete 
them  successfully.’’ 

Warburg  Dillon  Read,  tbe 
investment  bank  owned  by 
UBS.  was  ranked  second 
with  Sl9.Sbn  in  completed 
deals. 

Goldman  Sachs,  the  inter- 
national investment  bank 
that  is  set  to  float,  came 
third.  It  advised  on  12  com- 
pleted deals  with  a value  of 
$19.1bn. 

The  figures  also  show  the 
falling  value  of  the  UK  mar- 
ket. The  total  value  of  deals 
in  tbe  UK  dropped  by  nearly 
15  per  cent  to  $41.1brL  This 
compares  with  $47bn  last 
year. 

Schroders.  the  British 
investment  bank,  topped  the 
list  of  advisers  involved  in 
UK  deals. 

It  was  involved  in  10  deals 
valued  at  $15.1ba  Warburg 
DUlon  Read  came  second 
with  $12ba  of  UK  deal  fiow. 
Morgan  Stanley  Dean  Witter, 
the  intemationai  investment 
bank,  was  third  with  $4.3bn 
of  UK  deals. 


The  Slovak  government  is 
planning  to  sell  its  36  per 
cent  stake  in  Globtel,  tbe 
country’s  leading  mobile 
telephone  operator,  which 
could  allow  France  Telecom 
to  win  majority  control. 

The  government,  which  U 
also  i sailing  a third  mobile 
licence  and  selling  part  of 
I the  country's  fixed-line 
j monopoly,  is  to  choose  an 
' adviser  for  tbe  sale  next 
week  from  among  five 
inv^tment  banks. 

France  Telecom,  Giobtel's 
strategic  partner  and  owner 
of  a 35  per  cent  stake,  said 
yesterday  it  was  studying 
the  proposal  with  "great 
interest". 

The  company,  together 
with  a private  fovestor  who 
owns  29  per  cent  will  have 
first  refusal.  "Globtel  is  a 
very  successful  business.  Of 
course  we  are  interested." 
said  France  Telecom. 

Globtel  has  become  the 
leading  GSM  900  operator  in 
Slovakia  ~ with  376X100  sub- 
scribers and  a 63  per  cent 
market  share  - through 
keen  pricing  and  advertis- 
ing. 

After  investing  Sk7bn 
f$16.78m)  so  far  and  up  to 
another  Sk2bn  this  year,  the 
company  expects  to  record 
its  first  profit  in  1999. 

The  mobile  market  in  Slo- 
vakia has  been  amongst  the 
fastest  growing  in  Europe, 


with  penetration  (telephones 
per  beadv  reaching  10  per 
cent  after  just  over  two 
years  of  GSM  operation. 

However,  there  is  already 
some  concern  among  the 
existing  operators  whether 
tbe  market  has  room  for  a 
planned  third  licence. 

Bids  for  the  third  operator, 
in  the  hi^er  frequency  GSM 
ISM  band,  are  due  on  April 
15. 

France  Telecom,  which 
also  has  stakes  in  mobile 
operators  in  Romania  and 
Moldova  in  the  region,  is 
also  considering  participat- 
ing In  the  partial  privatisa- 
tion of  Slovak  Telecom  later 
this  year. 

Advisers  for  tbe  tender  are 
expected  to  be  appointed 
later  tlus  week  and  Ae  com- 
pany - one  of  tbe  last  fully 
state-owned  fixed-line  opera- 
tors in  the  region  - should 
have  a foreign  partner  by 
tbe  start  of  next  year. 

It  is  not  yet  clear  whether 
the  government  will  ban 
France  Telecom  from  partici- 
patir^  because  of  Its  Interest 
in  Globtel 

Slovak  Telecom  owns  60 
per  cent  of  EuroTel.  the  rival 
mobile  operator,  with  4Q  per 
cent  held  by  Media  One  and 
Bell  Atlantic  of  tbe  US. 

Bruno  Dutboit.  France 
Telecom’s  general  manager 
of  Globtel,  said:  "France 
Telecom  has  quite  a strong 
Interc^  but  in  no  case  wUl 
they  leave  Globtel." 


■ ■ 


•.  


COO'LM-]  suijplfes  moiY-  lUan  40  utiUiics  in  Kuropf.  the  Vnitrd  SlaU's  and  ihr  Far  East  ii  ill)  prthimis  tim!  scrx  hvs. 

ntr  CtfGKM  I Group  COGEMA  in  1998  : 1 

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Thr  CtfGKM  I Group 
spcdaUscA  in  Ifir 
ituclrur  fuel  c,n’le. 

II  Is  urlhr  Ihronphoul 
Ihr  iiwr/€f  in  all  Us 
aspn'ls.  fiom  orr  pnu*- 
prt'Uup  lo  spent  fuel 
reprueessinp  and 
ellpfi.  lurludfnp  all  op~ 
eralittus  assoelaletl  i»//A 
nuclear  fuel  fhhiirallon. 
us  well  as  ^‘Sipn  and 
4'ottstrucUoii  enfsineer- 
iuff  for  the  rorrespwt- 
dliiff  ins/aUaikuts. 

With  Its  sufrNifll«irf<*s 
aud  other  holdings. 

II  has  a btrfie  sliare  of 
the  market  for  products 
and  sen  Ices  roitnrrfril 
II//A  auelear  euerpf 
aud.  outside  the  nuclear 
field.  pro\ides  eupiueer- 
luft  and  sen  Ires  lo 
other  iuduslrles. 


t ouro  . e.Ssasr  Franen  francs 

Salas  ravanua 

Operating  income 

Current  income  before  taxes 
GoosQlldated  net  income 

Net  result  rBroua  share) 

Foreign  sales 

Cash  fiow 


MF 

31  .437 
1.090 
1.S56 
1.432 
1.178 
12.720 
9.047 


MF 

.32i6S7 

^ 772 

1 .447 
~ t.179' 
1.042 
12.403 
9.94~9 


eounrv  nsmiaunON 


f HIM  fnibli* 

• MllMCll  I 1m  I 

7.R71 

|8XI?3) 


Consolidated  sales  revenae 

n-M-mir  %:is  tV  4‘.tT  millkm 
(€  -I  7!Kt  iiiillkHU.  hm-itfi  sill's  ,‘KriHUi|i'(l  for  -HI.Tiii  iil 
liiliil  Silk'S,  auiiliisi  :hvki  ill  I!ri7.  TIh- .'i.7"n  ihrn'iM' mi 
liKi?  in'hniir(l\  i\*siiHvi!  (eNM  \mi(mUiiiis  in  ivpnH‘i->4«hit! 
jitii  inins|i«iri  uiicriilliiiis.  (*riHiuiiicin  ui  Iji  IkiaK'  uibi 
IGIII I III  lf)<M!  nmi|i.uiil  Ailli  Mitht  I in  liKNi  niis 

itif  nrsl  vnmirit’lt'  \ciir  of  ilK'  -4:ii1U(t  <i(  tlu>  rui,ii  slmUkMii. 
ihiiNiinil-«-kinifia  iuul  n:i>li*  n'liHiilIlkMiliK!  iinviiniib-  lor 
IlK'  I I'l  iilniil  in  UtiRiHik'.  kiill  lr:iiF«piii1  nf  sjK'nl  Iih'I 
i\:»;  suSKisktl  hi  SiHin!!.  «lut-  lo  1 (uiunnln-ithdi  hirkk'ius 
U llH'  t'liil  Ilf  Uk'  ii'k'ir.  onh  lr«iits|Niri  of  liiH  iinliiiNl- 
(sl  rniiii  l-UM-'  n-:irl«ir>i  IkkI  Im-iii  n-sumnl. 

On  (hr  iHlUT  tuiKi.  rui'l  sik'H  hi  iniUhl'lRril  tiHIl  IIn' 
nmnlli  oT  \l<  i\  litri  suit's  «hhI  ntcniir  fniin  niuiiiirriiip  iIIhI 
srniii's  ill  ImiiHn  iKrtshk'  llii'  linnii|i  nmiliiuiil  unm. 
liffiHv  i-limliKilkNi  Ilf  iiiliTiaiHi|i  Iniusp'lliHn-  Silk'S  mc-iim* 
iRHli  iiicliKrrInu  .iiiil  si-i^k'i-s  lu  Uiiheiln  .mIKIiIi—  uhiiIiI 
iKni-lH-t-ni-Vti.l  bHikiiitn  lUiXt  lnnei»'i'rtnsi''V2.!>i)lllhiii. 
M*nlii^liilniiir-lr>  M-‘;i.l2hUlliHi|.iiMii|iiiir(lullli  M-TMi  Nl- 
liiRlNl  iiifniiil<iMfiifiHHli':irorii'<KlhilK's(miiiiiieL 
nr.mliini  tmlcliiniiili.  sak*<  n'\t*in»'  iviii.iint'tl  t'kiM-  In 
Ihctr  lfM7  bnt-l.  11h'  ikiiNiiiiiisskHihK!  imisniin  Inr  llii- 
I’H-nt'killi'  iiuli'Iiiiiiiil  |il.‘ifils  i\>K  iiillkiliii 

Results  for  the  year  1998 

I l{H'i tilliic liKiimi'  n-is  l-l''  I.ISMI inlUmii  uf will's nn- 
iillH-)  .ifb'iiiisl  l-V  772  mtlliiiii  In  lfRl7  ,i  M'.ir  nlik'li  sm 
)-V  :KI2  minimi  Ilf  :i|i|ini|indliiin  lo  ,'Nhli>intin:iI  imntskins 
fur  riiltin-  n-sInHlunillmis  iiikI  nilirr  |inli-iilhil  ll■lll•IMk'^. 
Ciinmi  liMiKiN-  (lN-|iiir  liiwi  iJ  iiMi'uruiril  l-l•lll|Knli(■s 
Mils  1-1*'  inHIhHi  uf  wdtw  <t^^•tuK'l  iUiilhist 

l‘T‘  1 .4-17  niililiHi  in  l!i!l7  uhk  h iH-iirllli-tl  Insii  ,m  t-Mnior- 
ilin,*ir%  ilhlik-nii  iJ  I'V  i IM  inHUim.  rnmi  iIh*  nii'r- 

{s-r  (it  Suiv.*  iUHl  I.MHuuitM'  ik-s  IUui\.  IMr.HinliiMit  |ii- 
(irtni-  wiis  l-'K  .'Uli  iiilllkvi  ill  lfl*M.  iniimlhi;:  l•‘l•'  5Hi.'i  mil- 
ikm  (it  i-<i)ill.il  atins  Iiiim  itH-  ■sih-  nl  \t',F  siiitn's*.  in 
iiriiiii*i1ii)ii  Willi  u litki'Hiirr  likl  iiniihifij:  iIk*si’  sIkiii^  in 
|}I*IH.  innl  ti  luiAf-iini  iiF  l-V  iiiHliiin  irsiiliinu  Inim  llM- 
ib-rlskHi  lo  >us)x*wl  tsiKhKlIiiii  tii  2<KHI  leim  IIh*  LiuH'  iini* 
iiliiHi  mini*  ill  t:.iii,iib. 


MtiT  ii  liix  rftiiisi'  III  I'V  (i2li  iiiillliMi  iiHiiiKiivtl  willi 
W *.W(>  iiiHlhHI  111  ll'!>7.  nNTsoliii.iliil  iirl  imiMlIt*  (lii'kin' 
ullliiillAmiiiiiilmMKlwilll  liir  I Mini  oils  l-V  1.432  iiiilliim  or 
4.(i'hiiir s.'ihN  nnnmr.  niiii|i,-inii  nllli  l-V  1 . 1 7H  millluii  uml 
of  s:ik*>i  n^nni>'  ivs)iiithi'f\  lor  (In*  |in'\iiiiis  m-iit 
Vi  n*siill  (Miiii|i  sli.in-|  n;ts  |-V  I.I7K  iiifllkiii  :ij!.ilii.>il 
l-V  I J)42iiriirviiini  l!K)7.,iiihii-n-.B.i*ii|  i:rs>.  Kiliinimi.-4i,‘ins 
Ihtkk-is-'  t-tiiHti  \\,is  |{  ri"i,  hi  ■ip.ihisl  7.<>">,  In  l!Hi7 

iiMinhiar  hi  imir  Iniiui'  (JtiofiirWvsfiHtfHi'  ,uni 

ft.>Ufer«s 


Investmecsts 

liMhLs|rl,il  lincsliiH'iils  liiiil  Inr  l!>*WI  .‘inimiiiliil  In  iir.'iili 
ri-'2It  (HHiiHi(l‘V‘.vr>liilUiHi  hi  I'MI7)  V|  lHi,HH-t,il  hncsl- 
llK'iils  i'iKit  ikfiiiriinc  iipiili  sites  iiiiiniiiili'il  io  iie.irh 
l-V  i.l  liillkni.  Ilii'i  I'SM'iiliiilli  iiKlmliil  C<nJ-;\l\  iim- 
Ikiiutl  lhi(I(l-ii|«  ut  its  imifi-leiiK  iiiu-slnK-iil  iiorUolki  (k- 
sl0Hil  hi  ihiiIiIIniIi*  III  iinei  IN  lullin'  deiiMiiiiils-Uiniiiu: 
«llHin,v4«'n.‘ihililk"-  (11131  iH-u'iiilN-r  liRKi  Inr  InlulfiiliiM* 
(lUil  (liMlHUUiill  (ilillmilkHl-i  esItiiKiled  .il  (-V  2.~.~  liilltiRt 
IIh-  Ii;iI>iiiii-  sIry'I  wiliie  nf  till-  iMiitkiliii  mis  l-V  lill- 
Ikm.  ailirl  ils  inui1,e)  Viilm*  .it  llie  I'liil  nl  lls'  vivir  \i,i> 
I'T'  22.1  iNllkHi  (lii’|i<n-  i‘,i(ill:il  anus  u\) 

Outloofc  for  1999 

IbiniiU!  iinr\|in1<-ii  in  ihui  iiiiim'iH  leiliiik*>il.  miili.H'- 
(iiiil  tn  iKilith'iil  I'M-tils.  tiu'  r<K2‘,M\  .liins  m «ini> 

solliLilr  III  n'slills  .iiliiiii'il  In  IlhMI.  wliili-  iimIii- 

liMlillip  llhtfi  li-vrlx  Ml  liUHlk'.il  .‘mil  Sill'll  |ii‘r1iuill.HKV 


COGEMA 


III  ts^ 


GOGOM  - Camauaieaioa  OMstoa  - Z.  m ftig  OmOer  - fsi4l  Whf-VfHaoeaUaf  - Hama 
naae:S31 3SX38S3-F$x:9S  13BXSg7Z8-lHttnietUlp:^t¥wm.cagema./r 


South  Africa  looks  ta:  Aus|§[ 

Iscor  to  sell  exploration 


A bid  by  DRD  for 
Emperor  Mines  is  just 
the  tip  of  the  iceberg, 
writes  Victor  Mallet 


The  Financial  Times  and 
The  Wail  Street  Journal, 
which  compete  around  tbe 
world  in  business  journal- 
ism. are  to  join  forces  for  the 
first  time  to  help  launch  a 
daily  business  newspaper  'in 
Russia. 

The  newspaper,  which  is 
to  be  published  later  this 
year  in  Moscow  and  St 
Petersburg,  will  include 
articles  from  about  20  Rus- 
sian journalists  and  aill 
have  a Russian  editor,  but 
will  draw  on  material  from 
the  FT  and  the  Journal. 

Pearson  and  Dow  Jones  & 
Co.  which  own  the  two 
papers,  said  yesterday  they 
had  agreed  to  co-operate 
partly  to  share  the  ri^  of 
any  new  venture  in  Russia. 

The  two  companies  will 
each  take  a third  of  the 
equity  in  the  newspaper, 
which  vvill  comprise  one  sec- 
tion printed  on  pink  paper 
and  another  on  white.  *1116 
third  shareholder  will  be  the 
publisher  of  tbe  Moscow 
Times.  Independent  Media. 

They  have  jointly  commit- 
ted up  to  810m  over  three 
years  to  bring  it  to 
break-even  on  daily  sal»  of 
30.000.  The  paper  is  to  be 
edited  by  Leonid  Bershidsky. 
with  Anthony  Robinson  of 
tbe  Financial  Tlm^  as  con- 
sultant editor. 

Karen  Elliott  House,  presi- 
dent of  Dow  Jones'  interna- 
tional group,  said  it  was 
very  unlikely  to  lead  to  any 
cooperation  between  the  FT 
and  the  Journal  elsewhere. 

The  Financial  Times 
signed  a joint  venture  with 
Izvestia.  tbe  Russian  daily 
newspaper  in  19^.  but  ended 
this  when  the  newspaper 
was  taken  over  by  Onexim- 
bank,  controlled  by  the  Rus- 
sian oligarch  Vladimir 
Potanin. 

David  Bell,  chairman  of 
the  FT  Group,  said  tbe  new 
venture  would  be  "a  newspa- 
per for  Rushans  and  not  a 
reworking  of  tbe  FT  or  the 
Journal".  There  was  a strong 
demand  among  Russians  for 
rellable  and  independent 
financial  information. 

Independent  Media  was 
founded  in  1992  by  a group 
of  Dutch  investors  and  is 
now  35  per  cent  owned  by 
VNU.  the  publisher,  with  10 
per  cent  held  by  Menatep 
group  In  Russia. 


The  recent  hostile  bid  by 
Durban  Roodepodrt 
Deep  CDRD),  the  Johan* 
nesbu^-based  gold  mining 
company,  for  Australia’s 
Emperor  Mines  Is  the  latest 
sign  of  tbe  growfog  mthust- 
asm  for  Australian  assets 
among  South  African  oompa- 
nl^  trying  to  increase  tbeir 
QffisboFe  earnings. 

DRD,  which  specialises  in 
margiiia]  gold  mines,  wants 
to  win  control  of  Emperen's 
mine  in  Fiji  as  part  of  a 
strate^  of  expanding  Its 
operations  into  the  Asia- 
Pacific  regioa.  l<ast  month. 
DRD  listed  its  shares  on  the 
Australian  Stock  Exdiange. 
but  it  then  suspended  its  bid 
for  Emperor  because  of  a 
I^nl  challenge. 

Mining  is  not  the  only  sec- 
tor to  attract  tbe  attention  of 
South  African  investors. 
Johannesbiug-listed  retailers 
such  as  Pepkor  and  Metro 
Cash  & Ca^,  information 
technology  groups  such  as 
Dimension  Data  and  Data- 
tec.  leisure  companies  and 
financial  services  providers 
have  all  made  big  acquisi- 
tions. Smaller,  unlisted 
groups  have  also  been  buy- 
ing Australian  businesses. 

South  African  buyers  are 
estimated  to  have  spent 
nearly  AS2bn  ($1.25bn)  lo 
Australia  since  1994,  invest- 
ment bajikers  say.  "It’s  rare 
that  a month  goes  by  with- 
out a new  story  that  soma 
South  African  company  has 
appeared  on  tbe  scene,"  says 
Terry  Goss  of  the  Ausitiallan 
Trade  Commissiem  in  Johan- 
nesburg. 

There  are  cultural  ties 
between  white  South  African 
businessmen  and  their  Aus- 
tralian coonterparts,  indud- 
ing  the  use  of  the  English 
language  and  a shared  love 
of  barbecues,  cricket  and 
rugby.  Many  South  African 
entrepreneura  have  emi- 
grated to  Australia  in.  iJie 
last  15  years. 

But  critics  ask  whether 
there  is  any  business  logic 
behind  the  recent  baying 
spree.  "I  think  It's  because  of 
the  lifestyle  and  tbe  Semth 
Africans  seeking  to  emigrate 
to  Australia,"  says  one  scep- 
tical South  African  company 
chairman. 

John  Smdlt.  portfolio  man- 
ager for  Africa  and  the  Mid- 
dle East  at  Scottish  Equita- 
ble Asset  Management,  is 
also  wary.  He  says  foreign 
investors  can  buy  Australian 


Iscor,  the  South  African 
ste^maiteT  and  mfnerails^' 
produoM*,  said  yesterday  jt  . 
was  divesting  idl  its  ' 
hTtemadonal  exploration  io  - 
AfrieWest  Gold,  an 
Australian  company  based  in 
peith,  and  would  buy  more 
toan  50  per  cent  of 
AfiicWest  as  part  of  the 
deair  wiftes  Ifictor  Mallet  in 
Johannesburg. 

Iscor's  other.  intereEts  in  • 
Australia  include  a 36  per 
cent  stake  in  TTcor,  vyhich 
has  a fftanjum  sandis, 
synthetic  rutile  and  pigment 
(iteration  near  Perth.  It  also 


has  ajbint  venture ' ’ 
1*{ancod4  piviepecBnginf^ 
Vjfostern.Australtan.l^^ 
Hope'Qbvm 

wh^jaifeaSbiBty.-shJt^^^  = ' 
undarwsv  on'estabttSMng  e ' -• 
15m tonnes p«y^ iron.  *4.. 
ore  mine.  • . V . 

- AfrfoWest  ' 

exploration  licartces  in  Wek. 
Africa -and  vriH-reewe'  ' ■ . - 
Iscor'sg^  sjgsloridlcm 
fioehoesin  Tanania, ' . 

Uganda,  the  South  PadHle  . . 
and  Kaz^distan.  Iscor'will  ■'  - ’ 
have  toe  fight  of  first  refb^ 
bn  developing  any  large 
by  AfrkSAfest-  ‘ ^ 


IS  Re;rtT/  THe  iMcioviBrigmaiit 
-me  PIT  is“  fSfCHi;  ajr  i snu  fW/eaxjBi? 
tearr  oPTHsR 


equities  directly  if  they  want 
and  are  unlikely,  to  be 
impressed  by  South  African 
companies  that  have 
diverted  their  resource's 
away  from  the  African 
markets  they  understand.. 

"^ey  are  siqjposed  to  be 
doing  this  for  investment 
reasons.  I riiink  they  are 
mistaken,”  be  says.  ”You 
sGiso  have  to  wonder  about 
the  qrmlity  of  the  Austrahan 
companies  that  they  get 
offered.” 

Mr  Smelt  is  particularly 
doubtfhl  about  tbe  ability  of 
retailers  to  perform  in  for* 
eign  markets.  Several  big 
inv^tments  in  the  sector 
include  the  A$L<40m  acrpiisi- 
tion  of  Country  Road,  the 
loss-making  Australian 
clothing  chain  by  South 
Africa's  Woolwotths  <unre- 
lated  to  other  companies  of 
the  same  name^. 

Those  Involved  in  the 
recent,  acquishloiasy  how- 
ever, insist  that  It  makes 
sense  - for  Sooth  African 
investors  to  move  into  an 
English-speaking  market 
that  is  larger  than  tbeir  own 
but  not  as  big  or  competitive 
as  tbe  US  and  Europe. 

"The  economies  are  simi- 


lar - swiherh;hsmisph^ 
same  language.  - smne  r^-- 
-turei''  says  , joke -Andrew,' 
-head  of  the  Aiistaralfs  d^.at 
Band  Merelmnt 

hee.' advised -many  of  the''. 

. South  Afriiran  investors:' 

Mr  Andrew '-says '^nth.;;^ 
■'  'Africarr  900^  'ace'^dws^'  ^ J' 
a strong,  intepest.fri'a  ihrbad 
range  Aostraltah 'seetd^  ' 
indudlhg  electromcs-and;. . 
heai^' erigldseringV  8oa&- ; 

Africans  in  the  stcm  secto  . 
have,  fbith  in 'their'.o.wh: 
retailing  expertise  and 
believe  they  will  be  able,  to' 
turn  round  tbe  .cpmpanito  ^ 
they  have  bought'^ 

. Carlos  dos  Sauted 
executive  of  Mete  .Cash  ' 
Cany;  which  has  operafiohs-. ; 
in  IS  Afirfcah  counti^  .imd.-i.. 
to  the  MidiRe  Eash- 
(fifficulties  after  last  yearis 
A$400m  purchase  of  Davids: 
ths  grocery  groups  But  heJs 
confident  that  bi^ier 
■gins.,at'^Qav|d^wflI.‘to]^n^ 
Metrash’s  bbtiom  wifidn 
two  and  a half  years.  ~ ' 

"In  retrospect  I'm  very 
happy."  he  says.  "And  it's 
nice  to  have  a currency 
that’s  not  quite  as  soft  is 
some  of  the  African- currao- 
des." 


?9&8  consolidated  accounts 

-:3' 


improved  results  >r 

iri  favourable  j g 


circumstances, 
Dividend  up  b/  3.33--t, 

The  board  of  directors  met  on  the  31th  March  1999.  chaired  by  , 
Mr.  Georges  MAZAUD,  to  dose  the  Group  accounts  for  199B.  1 

CONSOUDATEO  ACCOUNTS 

1 

1 

1 539.8  1 

1 Pie-ur  rMurring 

i n 

i 

623  f 1 

I rash  (low 

950  ; 

823 

• ecntSWir9M4aWURCedn922.91MFFO40.7M 
euRKl.  Ibis  reprpsens  an  increase  of  % compamf  m'tfi 
(insoUdiW  nnm  bi  I99>  <MMth  lode  account  at  lenb  front 
0PM  bofldiiigs  as  ol  die  hr  July  1997. 


(K51WtS>  NET  ASSET  V»LV 


Ihs  has  increased  by  2.S  Ik  n SS2  FF  per  share 
(99.4  euml  rwi  of  duties  and  before  Be. 


• Operating  fncome  neonM  an  inaease  of 
2S  H.  outperforming  rents. 


• Recurring  profit  per  s/ure  rose  47  6.2  % lo 
26.68  FT  (4.07  eiROi}  WMK  25.1 1 W 3.83  eWK}  m 1997 


• Ttfer  ntcome  per  share  reached  77.32  FF 
12  64 eurasl compared iwib-l.S2FF(-i) 23 eumlm  >997. 


Ibe  posiove  irends  noM  *1 1 998  are  continuing  Inio  1999; 

• in  die  lesidmuai  seem  tens  on  resetting  contaue 

n increase,  standing  at  *6.85  since  the  cd 

the  year  emnpared  wnn  .*4.56  Cor  1998 

• cammcKuI  prapenir  ocoipancy  lam,  in  the  Mmuable 
come«  of  (he  nudei,  iiwll  cwrtnie  10  use 


• he-txtrecutTktgtashlhwpershareefSZ.SIfF 
(496  «wos).  cnnpaied  with  3120  F (4  76  eieosl  « 1997. 
st«iwaRinoeaseQ(42  W. 


Next  meeting  : 


Annual  General  Meeting 
on  the  9th  June  1999 


DMDEia):  15.6  FF  NET 
036  eiawl  PM  SHAM 

Giuen  these  good  ri^ults  and  bnu- 
iaUe1aKcaes,«»boanivu8r«ceRi- 
mendanettSatientipef^tare 
of  f£5  Ff  (2J6  eum),  d the  ACM 
wNch  Ul«s  (4acp  on  the  9ih  line 
1999  77its  is  an  merease  of 
3J3%  campared  iivith  T997. 


fivccix  CtanL-tniof  nje dc  1;  riJd^nUai  • 7573J  WF.IS  C2D:f  T5 - fnx? • P’t'Jf'tr.pj,’  ’ 6;  65  3D 


£25.000000 

Chettenham&Gloucestier 

Cheltenham  & Gloucester  pfe 

Floating  Rate  SubonflOHiad  Notes  due  2004 


NHic*  In  nmby  given  SMS  tor  ew  sb(  inonM  Mara*  Ponoo  (ram  April  6. 1990 
to  Ooober  4. 1990  (101  Vaye)  aw  Notos  MU  eawy  an  Hnaresi  raia  of  6 0^ 

TfiaiBieteatpayBtUeQBOiaietowaMintoteetpayBiemdMaOaobera.iaaBMa 
ba  E2j80l.78  par  CtMOOd  danemMen. 


Byi  Tho  CtNM  NtantalMn  Bank 
London,  Prtncbiat  PeyhiB  Aeant 
Aprtaseee 


0 CHASE 


NOTICE  TO  BONX7HOLDERS 

Ritdt  Corporation 

Oaeonsorated  toSA  Uadted  Uabllliy  In  TaiwsBS, 

The  R^obllc  of  OfauO 

USS90,000,000 

0.25  per  eead,  Coavoglble  Bonda  dne  2005 
BrgEr 


NOTIC6  IS  HEREBY  OiVEN  (tiat  (ha  Cenvarsion  Rialu  shall  ba 
suipanood  Iidri  Aprt  10.  1999  to  Mey  17.  1999  (Bon  bichniw)  as  lha 


w comem  o sharetioUeis  meoM 

May  17. 1999. 


eyRtokCOtpORBcn  DnaftBAeA  19S. 


CHESHIRE 


8UIIPINC  SOCIETr 


■'(rkoipci0iein)  ErgLndisdff  tk 
BmUiic  SorniMS  Act  I9S67 


£10,000,000 
Floadog  Rate  Panaaoem 
lacacsc  Beariog  Sham 
(PIBS) 

For  die  Interest  PmJ  31st 
March.  I999io3CdtSe|-rciBbei; 
1999  ihe  PIBS  will  carrv 
an  tniocsi  Race  u|  7.65% 
per  jniuim.  The  Ininra 
Amount  per  £(j]CQ  will  be 
£3SJ5  pmble  00  iha  3CUi 
Sepwnbe^  1999. 

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Credit  Suisse  First  Boston. 


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;j.j.V\'  :.  • www.tech.csfD.com 


FINANCIAL  TIMES  THXJRSP/VY  APRIL  S 


COMPANIES  & FINANCE:  THE  AMERICA^ 

EMTERTAIMMENT  CANADIAN  GROUP  SHARES  SOAR  ON  NEWS  OF  INTERNET  SALES  VENTURE  WITH  GERMAN  COMPANY  _ _ COSt  ClltS  llClj)’ ■ 

Seagram  unveils  alliance  with  Bertelsmann  Alcoa  advaBo^ 


^ Christopher  ftilGBs 
to  Los  Angeles 

Seagram  shares  surged 
almost  7 per  cent  in  New 
York  yesterday  morning 
after  the  Canadian  group, 
the  world's  Leading  mi^ic 
distributor,  announced  a 
plan  to  join  forces  with 
third-ranked  Bertelsmann  to 
seQ  discs  online. 

The  alliance  of  Seagram’s 
Universal  Music  and  the 
German  group,  whicb  claim 
to  account  for  45  per  cent  of 


all  music  on  the  market,  rep- 
resents a belated  effort  to 
compete  with  established 
internet  retailers  such  as 
Amazon.com,  CDNow.and 
media  rivals  such  as  Via- 
com's MTV. 

BMl  and  Sony  have  similar 
plans,  and  the  world's  top 
five  distributors,  which 
include  Time  Warner,  are 
collaborating  with  Interna- 
tional Business  Machines  in 
tests  of  internet  distribution 
technologies  to  counter  the 
threat  from  systems  which 


allow  listeners  to  download 
music  fi^. 

7*he  Hnk  foUov^  Uie  com- 
pletion of  Seagonm's  S10.4bn 
acquuution  of  PolyGram.  and 
confirms  the  group's  eager- 
ness to  establish  a presence 
in  a sector  of  the  e-com- 
merce market  whicb  is  pre- 
dicted to  grow  to  $4bn  a year 
within  five  years  from  about 
$S0m  a year  at  present. 

World  music  ^es  are  now 
worth  about  $38bn  a year  at 
retail  prices. 

Edgar  Bronfinan  Jr,  Sea- 


Always  Coca-Cola,  seldom  fizz 


Shares  languish  as  soft  drink  markets 
become  saturated,  writes  Betty  Liu 


in  the  world  of  Coca-Cola, 
every  employee  Is  a mar- 
keter. every  ounce  con- 
sumed a success,  and  every 
can  an  advertisement. 
Behind  the  sweet,  bubbly 
beverage  lies  a huge,  well 
oQed  marketing  Trmrhina  - 
and  that,  many  industry 
erocutives  say,  is  wtmt  made 
the  son  drink  giant  a ^obal 
success. 

But  for  all  its  marketing 
campaigns.  Coca-Cola  has 
failed  to  satisfy  its  most 
important  consumers:  inves- 
tors. The  company’s  shares 
have  languished  over  the 
past  two  yeaia  and  Aow  no 
sign  of  perking  up.  Each 
time  bad  news  trickles  in 
from  overseas,  the  share 
price  sinks  further  as  inves- 
tors fteu:  profits  - 75  per  cent 
of  which  are  accrued  abroad 
- will  take  a hit.  While  the 
company  sells  as  much  on 
its  Image  as  its  product,  the 
soft  drinks  industry  is 
viewed  by  many  Investors  as 
stale  and  unfashionable,  par- 
ticularly for  a stock  market 
dazzled  by  young,  hip  inter- 
net start-ups. 

"[The  soft  drink  industry] 
is  becoming  a low-growth 
business.  It's  really  a satu- 
rated market,"  said  one  New 
York-based  money  manager. 
"Coca-Cola  can  talk  all  It 
wants  about  Increasing  the 
number  of  ounces  sold  every 
year,  but  there's  probably  no 
place  left  to  sell  Coca-Cola. 
They  can  continue  market- 
ing campaigns,  but  It's  a rel- 
atively mature  market." 

Indeed,  Coca-Cola  turned 
in  one  of  its  worst  share  per- 


formances in  1998,  managing 
a paltry  0.5  per  cent  gain 
against  a 16  per  cent  rise  in 
the  Dow  Jones  Industrial 
Average  and  a 26.7  per  cent 
Jump  in  the  S&P  SOO.  Even 
with  a 25  per  cent  decline 
over  the  past  year,  many 
investors  say  the  share  price 
is  overvalued  at  about 

For  a company  that  has 
made  shareholder  value  its 
creed,  and  numbers  the  leg- 
endary Warren  Buffett 
among  its  investors.  Coca- 
Cola  has  been  strangely 
quiet  on  the  subject  of  its 
stock  performance.  In  the 
1998  annual  report.  Douglas 
Ivester.  who  succeeded  the 
legend^  Roberto  Goizueta 
as  chairman,  noted  that  the 
stock  had  fallen  f^om  its 
July  bi^  on  comments  from 
analysts  that  Coca-Cola's 
global  strategy  was  passe. 
Undaunted,  Mr  Ivester 
vowed  the  strategy  would 
continue,  in  the  words  of  one 
of  Coca-Cola’s  slogans,  "now 
and  altrays”. 

However,  it  was  the  com- 
pany's overseas  exposure 
that  prompted  investors  to 
bail  out  in  the  first  place. 
Just  last  week.  Coca-Cola 
said  sales  volume  would 
decline  in  almost  every  part 
of  the  world  in  the  first  quar- 
ter. as  global  economic  tur- 
moil hit  consumption.  The 
news  caught  analysts  by  sur- 
prise and  prompted  a series 
of  downgrades  on  its  stock. 

All  of  Cake's  difficulties 
stem  from  the  overs^ks  eco- 
nomic environment,  says 
Douglas  Lane,  beverages 
analyst  at  Merrill  Lynch. 


"The  problem  is  that  the 
weakening  of  the  economies 
is  broad-based.  Coke  used  to 
benefit  from  a portfolio 
effect,  which  meant  that  if 
Mexico  was  down,  for  exam- 
ple, Brazil  was  ahead  and 
balanced  everything  out. 
Now,  however,  the  number 
of  good  markets  balancing 
the  hffri  markets  is  hpcnming 
fewer  and  fewer." 

Perhaps  most  disturbing  is 
the  struggle  for  sales  and 
market  share  on  Coca-Cola's 
home  turf.  North  American 
sales  volume  is  expected  to 
rise  only  1 to  2 per  cent  in 
the  first  three  months  of  this 
year,  compared  with  ana- 
lysts’ predictions  of  4 per 
cent  growth.  While  some 
attribute  this  slowdown  to 
price  increases,  a growing 
number  of  analysts  say  rival 
PepsiCo  is  to  blame. 

Coca-Cola,  it  seems,  has 
grown  too  comfortable  at  tbe 
top.  Analysts  say  the  com- 
pany is  betting  it  win  stay 
number  one  in  the  US,  sim- 
ply because  it  has  for  so 
long.  Meanwhile.  PepsiCo 
has  launched  aggressive 
advertising  campaigns: 
introduced  a one-calorie  cola 
drink.  PepsiOne,  popular 
with  weight-conscious  con- 
sumers: and  last  week  spun 
off  its  bottling  arm. 

■ In  one  of  its  most  creative 
campaigns  in  years.  PepsiCo 
is  blanketing  the  US  with 
catdiy  "Joy  of  Cola"  televi- 
sion commercials,  featuring 
celebrity  voices  Up-sui^  by  a 
cherub-faced  girl 

Coca-Cola,  meanwhile,  is 
running  with  its  seven-year- 
old  "Always"  slogan  and 
releasing  less  flashy  com- 
mercials pivoted  around  tbe 


gram  chief  executive,  said 
last  month  he  believed 
music's  potential  for  growth 
through  electronic  com- 
merce was  part  of  tbe  reason 
for  investors'  enthusiasm 
about  internet  stocks. 

Closely-beld  Bertelsmann 
already  has  its  own  Euro- 
pean internet  online  book- 
selling and  music  businesses 
and  in  partnership  with 
America  Online  runs 
Europe's  second-biggest 
internet  services  provider. 

The  venture,  to  be  known 


Hat  Coke 


' pitocs  rel86v8  H 
toeSVcemposlw 


as  GetMusic.  and  directed 
Initially  at  the  US  market, 
will  be  based  mainly  on  a 
network  of  online  fan  clubs 
already  started  by  Bertels- 
mann's BMG  arm,  which 
provide  chat  rooms,  live 
broadcasts  and  Interviews 
focused  either  on  specific 
artists  or  musical  typK. 

All  will  have  links  to  an 
online  store  at  getmu- 
sic.com.  which  will  sell  tbe 
catalogues  of  the  two  part- 
ners and  also  feature  titles 
from  other  distributors. 


Rgite  on  tor  Is  nnrito  share  W 
■i  Coca^kto  ISI  PspsGo . 


l3Ta  ■ais 


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■WtrtWife  ’ r I ' cJ 


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Sa«  Bnuini  n/J  ‘aniHnrMfegn&, 


classic  "real  thing"  image. 

Already.  PepsiCo  has 
nabbed  a bigger  piece  of  the 
pie.  The  company's  market 
share  in  1996  rose  0.5  per- 
centage points  in  the  US.  its 
biggest  percentage  rise  in 
years,  according  to  Beverage 
Digest.  Moreover,  its  stock 
surged  12.S  per  cent  last 
year. 

While  PepsiCo  faces  tbe 
same  maturing  market  as 
Coca-Cola,  analysts  say  its 
biggest  growth  opportunity 
may  lie  in  luring  US  Coke 
drinkers  over  to  its  products. 


rather  than  going  head-to- 
head  in  newer.  Less  devel- 
oped markets.  Indeed. 
l^iCo.  which  has  a long 
line  of  salty  snacks  and  soft 
drinks,  derives  only  12  per 
cent  of  its  profits  from  out- 
side the  US. 

Analysts  say  Coca-Cola's 
desire  to  play  safe  in  its 
home  market  may  eventu- 
ally cost  It  more  market 
share  and  deepen  investor 
concerns.  The  company's 
marketing  machine  will 
have  to  start  turning  faster 
If  that  is  not  to  happen. 


Boeing  aims  to  sell  information  services  arm 


By  Christopher  Parties 
in  Los  Angeles 

Boeing  is  in  negotiations 
with  unidentified  companies 
interested  in  buying  its 
Information  services  division 
and  expects  to  name  a buyer 
during  the  second  quarter. 

The  US  aerospace  group* 
which  recently  anoounc^ 


plans  to  either  "fix"  or  dis- 
pose of  unprofitable  and 
non-core  operations,  ssdd  It 
believed  Boeing  Information 
Services  would  have  better 
growth  opportunities  if 
owned  by  a specialist  infor- 
mation technology  company. 

BIS  is  based  in  Virginia 
and  has  a staff  of  1,200  in  the 

US.  It  inistallfi  and  managas 


computer  networks  and 
databases,  and  is  an  impo^ 
tant  services  supplier  to  the 
US  Air  Force  and  the 
National  Aeronautics  and 
Space  Administration. 

BIS  annual  revenues  are 
reported  to  be  $300m  a 
year. 

Boeing's  operations, 
dogged  by  difficulties  in 


manufimturing  and  market- 
ing commercial  aircraft,  are 
being  sulyected  to  a strict 
examination,  and  more  dis- 
posals and  reorganisation 
are  expected. 

Having  withdrawn  from 
the  market  Cor  light  commer- 
cial helicopters,  tbe  group 
recently  announced  a plan  to 
set  up  a new  engineering 


services  division.  Boeing  Air- 
plane Senices  will  operate 
In  CaUfornia,  Kansas  and 
Washington  state,  and  will 
provide  conversion,  retro- 
fitting and  repair  services 
to  passenger  and  cargo 
carriers. 

In  early  New  York  trading 
Boeing  shares  were  up  SVi  at 
$34"k. 


Channels  will  include 
Peeps  Republic,  dedicated  to 
R&B,  Twang  This!  for  coun- 
try fans.  Rock  Universe  and 
Connect2Mosic  for  "adult 
contemporary"  listeners. 

Mr  Bronfinan  claimed  yes- 
terday that  GetMusic  was  a 
"major  step  in  buQdlng  the 
interactive  mimic  channeto 
of  tbe  future". 

Thomas  Mlddelhoff. 
Bertelsmann  chairman,  said 
tbe  partners  had  the  critical 
maBs  to  create  the  internet’s 
premier  music  destination. 


Suzuki 
buys  small 
stake 
iuGM 


By  NBdd  Talt  in  Cldeago 
and  agencies 


in  first-quarter 


By  NUcId  Talt  to  CHeago 


Cost-cutting  and  efficiency 
measures  helped  Alcoa  o&et 
tbe  slide  in  aluminium 
prices  and  the  efibct.of  the 
BrazOlan  crisis,  allowing  the 
world's  biggest  aluminium 
producer  to  post  a surprise 
increase  in  first-quarter 
earnings. 

Net  income  was  S22Llm, 
up  from  $209An  last  time. 
RamtngH  per  share  slipped 
from  62  cents  to  60  cents, 
compared  with  analysts’ 
forecasts  of  54  cents. 

Alcoa  shares,  which  are  a 
constituent  of  the  Dow  Jones 
Industrial  Average,  stock 
market  index,  rose  more 
than  4 per  cent  in  early  trad- 
ing. climbing  $1^  to 

Analysts  have  semi  Alcoa 


Sip 


been  on  tbe  acquisition  trail. - 
buying  out  rival  Alumax. 
for  example.'  and-  Spain's 
hiespal. 

Paul  O'Neill,  chalrmaiti. 


as  a rare  bright  spot  in  the  said  yesterday,  that  mthout 


troubled  aluminium  sector, 
with  its  "Alcoa  Business  Sys- 
tem" programme  deiivertog 


the  ABS  programme  and 
various  "growth  initiatives”, 
Alcoa  would  have  been 


Japan's  Suzuki  Motors  cost-saving  and  eCGciency 
announced  yesterday  that  it  gains,  which  in  turn  have 
had  boi^ht  a small  stake  in  allowed  the  company  to 


cost-savings  and  eCGciency  looking  at  a fUOm  drop  in 
gains,  which  in  tium  have  year-on-year  incon».  iii.  tte 


first  quarter.  - ' - 

The  result  was  achieved 


General  Motors,  tbe  largest  buck  siting  metal  prices.  The  result  was  achieved 
car  and  truck  Eoaker.  saying  Last  July,  the  group  told  on  sa!^  of  $3J96bn,  up  from 
that  the  holding  was  analysts  it  telieved  it  would  gSATbn  a year  earlier, 
designed  to  bolster  the  part-  be  able  to  squeere  a furtber  Other  big' North  -j^nerican 
nersbip  between  tbe  two  $3.1bn  out  of  its  cost-base  aluminium  compahies,' 
companies.  over  the  next  three  years,  which  are  due  to  report  later 


companies.  over  the  next  three  years. 

GM  tripled  its  own  stake  mainly  through  organisa- 
in  tbe  Japanese  company  to  tioaal  changes  and  procure- 


about  10  per  cent  last 
year,  and  the  two  groups 
have  talked  of  jointly  devel- 
oping ania  n cars  and  passen- 
ger vehicles  for  developing 
countries,  particularly  in 
Asia. 

Suzuki  also  has  an  agree- 
ment with  Opel,  GM’s 
Germany-based  subsidiary, 
and  first  formed  a busl 
ness  alliance  with  tbe 
US  company  back  in 
1981. 

Tbe  new  Suzuki  cross* 


ment  processes. 

The  company  has  also 


which  are  due  to  report  later 
this  motfth.  are  eiqiected  to 
show  weak^  results  in  the' 
first  quarter,  compared  wifti 
the  same  period  a year 


Duke  digs  in  for 
Endesa  Chile 


By  naric  MtOigaD  *in  SanHago 


counted  a last-minute 
change  of  tactics. 

Bruce  Williamson,  chief 


Duke  Energy,  the  US  power  Bruce  Williamson,  chief 
holding  was  bou^t  at  a cost  group,  vowed  yesterday  to  executive  of  Duke  Energy 
of  alxmt  Y4.5bn  (S37.2m).  and  l^t  for  control  of  Endcaa  international,  indicated  yes- 
amounts  to  about  0.07  per  Chile,  the  country's  larger  terday  the  US  group  would 
cent  of  the  Detroit-based  electricity  generator,  amid  iaise  its  25p-pesoa*ebare  bid 

Intensi^ing  speculation  . if  it  were  contested.  "We*ve 


cent  of  the  Detroit-based 
carmaker's  equity. 


News  of  the  Suzuki  sudm  about  a biddii^  battie. 


emerged  in  Tokyo  as  GM 
released  its  US  sales 


raise  its  25p-pesoa*sbare  bid 
if  it  were  contested.  "We*ve 
spent  a lot  of  time  and 
money  contacting  [Endesa 
Chile]  shareholders  to  con- 
vince them  that  this  is  a 


The  company  has  olfored  money  contacting  [Endesa 
released  its  US  sales  $2.lbn  for  a controlling  51  Chile]  shardbolders  to  conr 
figures  for  March.  These  per  cent  stake  in  the  Chilean  vince  them  that  this  is  a 
showed  light  vehicle  company,  whi^  as  one  of  good  deal."  he  said.  "If  some- 
sales  for  the  month  at  Latin  America's  biggest  one  comes  in  with  another 
4S3.477,  down  2.2  per  cent  power  groups  is  considered  offer,  our  message  would  be 
on  the  same  month  a year  well  placed  as  a platform  for  that  we  intend  to  win.” 


performaoce 


analysts 


ago.  expansion  in  the  region.  Local  analysts  were 

GM's  performaoce  in  Duke's  bid,  which  is  con-  divided  on  whether  a two- 
March  1998  bad  been  particu-  tingent  on  Elndesa  share-  month  campaign  by  the  US 
iarly  strong,  but  most  ana-  holders  votii^  today  to  lift  group  to  encourage  Endesa 
iysts  still  expected  the  com-  inviratOT  limits  from  28  per  Chile's  48.000  shareholders 
pany  to  post  either  fiat  cent  to  65  per  cent,  has  to  support  the  rule  changes 


year-on-year  sales  or  a small 
Increase. 

Car  sales  were  higher  but 
truck  sales  nosed  down,  a 
trend  blamed  partly  on  sup- 
ply factors. 

Over  tbe  past  week,  most 
other  car  and  truck  makers 


Chile's  48.000  shareholders 
to  support  the  rule  changes 


ftielled  stock  market  talk  of  would  pay  off. 
potential  eounterblds,  Tbe  he^  of  one  Santiago 
Including  ffom  Endesa  stockbroking  firm  said: 
Spain,  which  took  control  of  "There  is  still  some  doubt 
Enersis.  Chile's  Largest  dis-  among  the  people  Fve  been 


tributor.  this  week.  talking  to  about  Endesa 

Through  Enersis,  the  Spain's  support"  Oth^  say 
Spanish  group  holds  26  per  Duke  can  count  on  the  Span- 
have  posted  strong  US  cent  of  its  Chilean  name-  ish  group's  26  per  cent  as 
sales  for  March,  with  sake.  It  is  committed  to  sup-  well  as  26  per  cent  from  pen- 
Pord  and  the  Chrysler  porting  today's  board  pro-  sion  fund  groups,  and  a 
brand  showing  double-  posal  for  a change  to  majority  of  foreign  investors 


brand  s 

digit 

increases. 


showing  double- 


year*on-year  shareholding  rules,  although 


majority  of  foreign  investors 
in  ADRs.  accounting  for 


some  analysts  have  not  dis-  about  15  per  icent 


One  good  way  to  increase 
the  value  of  a company  is  to 
make  it  the  world  leader 
in  its  field. 


' ‘ < ■'s  -V 

•*;  - - . 


Panek  is  the  leading  supplier  of  logtstic  solutions  to  ports  and  land  terminals,  and  load  handling  equipment 
for  vehicles.  The  company  is  also  a leading  producer  of  advanced  forest  machines  and  tractors. 

Each  Paitek  business  has  a sfrong  industrial  base  and  leading  position  in  its  sector.  We  are  actively 
seeking  further  opportunities  for  growth  and  releasing  capital  to  expand  and  develop  our  cotc  businesses. 
To  increase  our  competitiveness  and  ability  to  generate  profits  we  are  developing  our  operalionoi  processes 
and  integrating  our  businesses.  We  believe  in  the  strength  of  our  brand  names. 

Our  top  priority  is  to  raise  the  value  of  the  company,  and  to  offer  shareholders  an  attractive  and  liquid 
investment  opportunity.  Every  year  we  distribute  at  least  one  third  of  our  net  profit  io  dividends. 


1998  1997  Target 


Net  sales  wa»  2.277  *i.207  pa  Diyidend.‘snare  6 

Operstmg  profit  U.I  - 114  i22  RQi-- 

Balance  sheet  u.(«  1,693  1.675  ROE  -. 

£PS«  0.83  V3fe  Equir/  assee - 


KALMAR  SlSU  HIAS  MULTlUfT  VALTRA  VALMET  lOGL'RT 


We  handle  it. 


PARTEK 


Te(  «3S8  (0}  304  55  11 
Fax  ^353  (01 20A  55  4222 

wwwpartekcorD.cam 


m 


m 


$3,575,000,000 

CHARTER 

COMMUNMCATIONS" 


$600,000,000 
8.250%  Senior  Notes  due  2007 
$1,500,000,000 

8.625%  Senior  Notes  due  2009 

$1,475,000,000 

9.920%  Senior  Discount  Notes  due  201 1 
Coordinator  and  Joint  Book-Runner 
March  1999 


Premium  service. 


V larci^icf  eimenence  and  rfobal  distribution  neftwoHc  to  stTucture  and  place 

That,  what  ^ , ending  to  Ngh-yield 

cable  televBion  operators,  was  seda  g ■ securities  to  mezzanine  financing  when  it  comes  to  leveraged  finance, 

« r-H,  industry  tom  to  Goldman  Sachs.  And  gKre  your  ne.  offering  premium  billing 


The*  acute  hi»»«  teen 


a a inaaer  of  recCfd  enfifi 


24 


FINANCIAL  TIMES 


THURSDAY  APIUL8i999 


COMPANIES  & FINANCE:  ASIA-PACIFIC 


TELECOMMUNICATIONS  JAPANESE  GROUP  TO  BOLSTER  EQUIPMENT  DIVISION  WITH  TWIN-TRACK  GROWTH  STRATEGY 


Maisust^a  to  enter  moMle  phone  base  station  mark||| 


By  MicMyo  Nakamoto  in  T0I90 


Matsushita,  the  Japanese 
electronics  group,  aims  to 
strengthen  its  telecommuni- 
cations equipment  business 
by  entering  the  mobile 
phone  base  station  market 
and  Increasing  its  global 
market  share  for  handsets. 

It  plans  to  increase  its 
share  from  under  P per  cent 
to  at  least  13  per  cent  by  the 


end  of  2000.  The  group, 
which  manufacturers  mobile 
phone  handsets  at  its  subsid- 
iary, Matsushita  Communi- 
cation Industrial,  aims  to 
increase  its  share  of  the 
GSM  market  in  particular. 

Matsushita  is  already  the 
leading  mobile  handset  sup- 
plier in  Japan,  where  it 
eqjoys  a 35  per  cent  market 
share.  In  the  Japanese  mar- 
ket, size  and  weight  tend  to 


determine  the  popularity  of 
handsets  to  a laiger  extent 
than  in  other  markets. 

The  company  has  been 
able  to  take  advantage  of  its 
advanced  technology,  which 
has  enabled  it  to  supply 
some  of  the  smallest  and 
lightest  handsets,  says 
Ystfuo  Katsura,  director  of 
the  personal  communica- 
tions division  of  MCI. 

Close  relationships  with 


operators  and  the  ability  to 
tap  the  Matsushita  group's 
vast  research  and  develop- 
ment resources  in  Japan, 
bat's  also  helped. 

However,  the  Japanese 
market  uses  a system  known 
as  PDC.  which  is  not  used  in 
any  other  market.  In  giobal 
terms  Matsushita  trails  the 
top  three  manufacturers, 
Nokia.  Motorola  and  Erics- 
son. 


••We  are  working  very 
bard  to  move  from  Japan's 
tup  manufacturer  to  one  of 
the  top  three  in  the  world  by 
2001)."  says  Takashi  Kawada, 
president  o(  MCI. 

To  that  end.  MCI  has  tar- 
geted the  European  and 
other  GSM  markets,  in  par- 
ticular. for  future  growth. 
Tbe  GSM  .skindanl  is  e.vpec- 
ted  to  make  up  to  54  per  cent 
of  the  total  world  market 


of  200m  handsets  by  2000. 

To  achieve  its  goal  in 
Europe.  Matsushita  will 
expand  sales  of  its  UK  pro- 
duction facility  from  4,6m  In 
1998  to  7m  this  year  and 
streamline  its  distribution 
for  faster  delivery  to  the 
continent. 

Matsushita  also  aims  to 
enter  the  infrastructure  busi- 
ness where  it  does  not  have 
much  of  a presence.  It  will 


first  aim  to  supply  NTT 
Docomo,  Japan’s  largest 
mobile  communications 
operafor.  with  base  stations 
for  its  next  generation  dis- 
tal system,  expected  to  be  in 
operation  in  the  spring  oT 
2001. 

The  company,  whiim  has  a 
proven  track  record  in  hand- 
sets. is  a relative  newcomer 
to  tbe  base  station  market, 
where  giants  such  as  Japan’s 


I9EC,  Ericsson  and'  Lnceiti 
TeciuMh^es  dotuStt^ 

• It  is  faffiiBhig  readuEoes-an 
developing, base  staticmsand 
handsets  for  tbe  tbird.ges^- 
ation  mobile.  33^^; 
W-CDDIA,  whkli  it  mo)ecl8 
to  grow^  into  a.  T^,oootm 
($74bn)  martet  between -2000 
and  200s.  MCI  plans  to  inv^ 
Y60bn  in  the  yearn  ta^20oo.. 

in  raaeareh  and  dsfgekya^d 
d W-CDMA  tedmbU^.  • . 


A TALE  OF  TWO  AIRLINES  - THE  ASIAN  RNANCIAL  CRISIS  HAS  HIT  ALL  THE  REGION'S  OPERATORS,  BOT  SOME  HAVE  COPED  WITH  IT  BETTER  THAN  OTHERS 


Cathay  Pacific 
struggies  tc 
maintain  central 


Ilia  tale  Of  two  aMnes 
Sham  prices 


Casmrtadfk 
NetptnfitsilKM 
4.0 


SbigapofeAHnss' 
NetpnntsiSStin) 
1.1 


Stringent  cost-cutting  has  made  it  difficult 
to  maintain  standards,  writes  Rahul  Jacob 


Catbay  Pacific's  cost- 
cutting  drive  has  been 
mak^  for  more  than 
the  occasional  tei^  moment 
on  its  aircraft.  It  is  not 
safety  that  is  at  issue,  but 
ocher  bare  necessities  of  the 
good  life  at  the  front  of  the 
plane. 

Tt’s  unheard  of  that  you 
could  run  out  of  chocolates, 
but  we  do.  We’re  often 
scrounging  between  tirst 
class  and  business,”  says  a 
senior  fli^t  attendant. 

She  says  the  airline  has 
begim  to  leave  so  little  mar- 
gin for  error  on  tbe  number 
of  desserts  it  puts  on  its  air- 
craft for  business  class  pas- 
sengers that  she  has  begun 
to  worry  when  anyone  asks 
for  seconds. 

.\ntony  Tyler,  Cathay's 
director  of  corporate  devel- 
opment. admits  that  the 
economy  drive  In  late  1997 
and  early  1998  may  have 
been  overdone.  ”Bus\ness 
class  is  very  important  and 
it's  a big  mistake  to  lose 
those  customers  for  a fillet 
steak  here  or  there.”  be 
says. 

But  after  years  of  bumper 
profits.  Cathay's  manage- 
ment may  still  have  one  of 


the  tougher  balancing  acts 
in  the  Asian  aviation  busi- 
ness. They  have  higher  costs 
Uian  tiieir  regional  competi- 
tors at  a time  when  average 
far^  are  falling  rapidly. 

The  Asian  flnanciat  crisis 
has  made  matters  worse. 
Last  year,  as  cul-throat  com- 
petition between  airlines 
forced  fares  down  and  more 
local  companies  banished 
tiieir  employees  to  economy 
class,  Cathay’s  yields,  or 
average  fares,  plunged  19  per 
cent. 

The  group’s  profit  margins 
before  intei^t  and  taxes  and 
exceptional  items  have  been 
steadily  declining,  from  15.5 
per  cent  in  1992  to  1.5  per 
cent  in  1998. 

Cathay  has  responded  in  a 
number  of  wasrs,  including 
withdrawing  its  older  air- 
craft to  drastically  reduce 
operating  costs.  It  also 
embarked  on  a hi^  profile 
battle  to  bring  down  labour 
costs. 

After  bitter  squabbling 
with  the  union  earlier  this 
year,  the  airline  succeeded 
in  getting  most  atten- 
dants to  agree  to  a new  con- 
tract with  longer  working 
hours. 


Singapere  Airlines  keeps  the 
champagne  cerks  pepping 


The  carrier  has  fared  the  downturn  well,  reports  Sheila  McNulty 


1994  95  96  97  98  99 

naaetttHSBMMgMKliaT  -RnctenonBE 


Last  month,  after  a stand- 
off with  tbe  air  crew  officers' 
union,  ^thay  wrote  to  the 
pilots  directly  seeking  sub- 
stantial pay  cuts  in  return 
for  share  options. 

Cathay  says  its  senior 
pilots  are  among  the  best 
paid  in  the  world:  between 
1979  and  1969  its  air  crew 
received  annual  raises  on 
average  16  per  cent  above 
the  rate  of  inflatioiL 

The  demand  for  salary 
cuts  has  raised  plenty  of 
hackles,  but  as  one  pilot 
puts  it,  “I  haven’t  heard  the 
word  strike  used  yeL” 


It  may  not  come  to  that,  but 
zeroing  in  on  employees' 
wages  and  allowances  is  a 
slippery  slope  in  the  airline 
industry  because  service 
inevitably  suffers. 

This  is  even  more  troe  in 
Cathay's  case  because  It  is 


most  frequently  compared 
with  Singapore  Airiines. 
whose  cabin  crew  is  known 
for  service  that  sometimes 
borders  on  the  obsequious. 

SlQgapore  Airlines  has  not 
bad  to  cut  staff  salaries, 
which  were  lower  than  Cath- 
ay's to  begin  with. 

It  has  no  debt  and  has 
been  able  to  reduce  costs, 
thanks  to  a government 
edict  that  cut  contributions 
to  the  national  pension  plan 
for  all  corporatioDs  and  by 
the  Singapore  airport's  deci- 
sion to  lower  landing  fees. 

Cathay  may  be  flying 
against  the  wind,  but  h is 
also  being  creative  in  react- 
ing to  the  slowdown  in  busi- 
ness. It  was  a founder  mem- 
ber of  the  new  OneWorld 
aUiaoce  along  with  Ameri- 
can Airlines.  British  Ai^ 
ways,  Qantas  and  C-anadian 
Airlines. 


It  also  introduced  a cre- 
ative new  frequent  flyer  pro- 
gramme. with  tie-ins  with 
other  airlines  and  companies 
such  as  Citibank,  and  has 
also  increased  its  transpaci- 
fic Fligbts  as  demand  for 
regional  flights  have 
plunged. 


But  eveiyone  else  in  tbe 
region  is  doing  the  same 
and  now  there  is  overca- 
pacity on  the  long- 
haul  routes  as  well.  That 
will  hurt  average  fares, 
which  are  already  in  a 
long-term  dow'nward  spiral, 
declining  by  a couple  of 
percentage  points  every 
year. 

“The  environment  for  an 
Asian  airline  operating  in  a 
high-cost  centre  is  horrible.'' 
says  John  Hetherington.  an 
analyst  with  Paribas  .Asia 
Equity. 


As  tbe  regional  finandal 
crisis  intensified  this 
past  year.  Singapore 
Airlines  upgraded  its  first- 
class  cabin  with  individual 
suites  of  fully  reclining  beds 
with  inflatable  mattresses. 

It  added  a cheese-board 
service  and  gourmet  coffees 
to  business  class  while 
starting  a free  ilow  of  cham- 
pagne in  economy  class. 

In  addition  to  the  SKOOm 
(USS288m)  effort  to  introduce 
new  products  and  services, 
the  airline  extended  its  fre- 
quent-Oier  prx^ramme  to  all 
classes  and  announced  an 
agreement  to  pay  AgSOOm 
tUSS3I4m)  to  acquire  a 
50  per  cent  stake  in  Ansett 
Holdings,  which  owns  Aus- 
tralia’s second  largest  air- 
line. 

The  airline’s  underlying 
strength  lies  in  tbe  fact  that 
it  is  not  overly  dependent  on 
the  region,  has  no  net  bo^ 
rowings  and  has  close  to 
SS2bn  in  cash  and  invest- 
ments. And  although  the 
government  has  a majority 
stake,  it  has  managed  to 
maintain  its  competitive- 
ness. 

"Singapore  has  been  able, 
because  of  its  strengths,  to 
continue  with  its  long-term 
development  plans  while 
most  other  airlines  have 
been  in  crisis-management 
mode.”  says  Ian  Wild. 


regional  airline  analyst  at 
SG  Securities.  Its  b^g^t 
regional  competitor,  Hong 
Kong’s  Cathay  Pacific,  for 
example,  has  been  forced  to 
save  costs  every  way  posa- 
ble, he  adds. 

Not  that  Singapore  Air- 
lines has  been  unaffected.  It 
reported  virtually  flat  earn- 
i^  of  S$lA4bn  in  the  yrar 
to  March  last  yearjts  overall 
yield  fell  5.1  per  emt  year- 
on-year  for  the  six  months  to 

end-Sept.1996. 

While  it  is  easy  to  dismiss 
Singapore  Airlines'  success 
as  due  to  its  54  per  cent  gov- 
ernment stake,  analysts 
point  out  it  is  commetcialiy 
run.  Because  it  cannot  just 
service  a domestic  maiket  - 
there  are  no  domestic  flints 
- Singapore  Airlines  must 
‘venture  out  to  compete  with 
global  market  forces. 

‘You  cannot  protect  it  like 
you  can  a bank.”  says  Seafa 
Hiang  pnng,  airline  analyst 
at  Kim  Eng  Securities.  Ihe 
only  government  assistance 
is  in.  negotiating  landing 
rights,  he  adds,  something 
many  governments,  includ- 
ing Hong  Kong's,  provide. 

That  said.  Six^pore  jtir- 
lines  has  gained  from  gov- 
ernment efforts  to  make  the 
city-state's  airport  more 
competitive  amid  the  crisis. 
AU  airlines  flying  into  Singa- 
pore receive  a 10  per  cent 


Singapore  Airline  also 
defeirod  the  deUvety  d 
11  aircraft  to  mode^ 
capacity  increases'  and 
adjusted  routes  and  aircraft 
size  to  match  seq^y  wi^ 
demand. 

"Crisis  or  no  orisis,  we  are 
an  international  airlfoe, 
competing  on  the  world 
stage,”  sairs  Iffichael.Tan, 
the  alilme's  executive  vice 
president 

Tfot  all  of  our  competitors 
are  in  Asia.  We  have  to  coedt' 
p^  with  airiines  in  Amer- 
ica and  Europe,  ti^  are 
continuing  to  enhance  thrir 
own  products.  We  must 
forge  ahead  and  reassert,  our 
leadership  in  high-quality 
service  and  prodnet  innova- 

tiOIL” 


China  Telecom 
to  be  split  into 


four  companies 


By  James  HanBng  in  Shanghai 


China  Telecom,  the  de  fecto 
state  telecommunications 
monopoly,  is  to  be  broken  up 
into  four  separate  compa- 
nies, in  a a step  towards 
greater  competition  in  the 
Chinese  market. 

Wu  Jlchuan.  the  telecoms 
minister,  said  >’esterday  that 
China  Telecom  wiJI  be  bro- 
ken into  four  entities:  fixed 
line,  mobile  telecommunica- 
tions. paging  services  and 
satellite  communications. 

“The  breakmg  up  of  China 
Telecom  is  aimed  at  smash- 
ing tbe  telecommunications 
monopoly  in  ChintV  and 
introducing  competition  to 
set  up  a fair  and  orderly 
market.”  Mr  Wu  said. 

Yesterday's  statement 
from  the  official  Xinhua 
news  agency  xmderlined  how 
China’s  telecoms  minister 
has  bowed  to  pressure  from 
Zhu  Bongji.  tbe  prime  minis- 
ter. to  embrace  market  com- 
petition and  confirmed  the 
plans  to  restructure  China 
Telecom. 

The  official  announcement 
to  split  up  the  industry 
monolith  also  serves  as  fur- 
ther evidence  of  Mr  Zhu’s 
commitment  to  open  the 
telecoms  industry’,  one  of  tbe 


issues  that  has  long  held  up 
China's  bid  to  join  the  World 
Trade  Oi^anisation  (WTO). 

The  announcement  came 
as  US  and  trade  offi- 

cial were  seeking  to  resolve 
differences  over  telecoms  lib- 
eralisation as  well  as  tbe 
opening  of  other  market  sec- 
tors to  enable  a last  minute 
agreement  on  a market 
access  package  that  could 
pave  the  way  for  Chinese 
membership  of  the  WTO. 

China  Telecom,  wluch  has 
assets  estimated  at  about 
RMBseObn  lS87.6bn). 
accounts  for  about  95  per 
cent  of  the  country's  tele- 
coms market,  according  to 
yesterday's  report.  The  only 
other  operator  authorised  to 
offer  nationwide  telecommu- 
nications  services  is  Chixm 
Unicom,  which  has  assets  d 
RMBlSOm. 

China  Telecom  has  come 
under  severe  criticism  in  the 
state  media,  as  consumers 
ha've  complied  about  the 
e^nsive  and  inefficient  ser- 
rice  of  tbe  near  monopoly 
telecoms  provider.  In  a 
recent  poQ,  72  per  cent  of 
people  said  China  Telecom 
should  be  broken  up.  argu- 
ing that  competition  might 
be  tbe  answer  to  high  prices 
and  poor  service. 


IB  J unveils  plan 
to  halt  threat  by 


western  brokers 


By  Nwiko  Nakamae  In  Tokyo 


The  Industrial  Bank  of 
Japan,  one  of  Japan's  lead- 
ing banks,  has  unveiled  a 
three-pillar  securities  strat- 
egy to  defend  its  shore  of 
Japan's  lucrati've  investment 
banking  market  from  west- 
ern brokers. 

Masao  Nishjmura.  IBJ 
president,  also  left  the  door 
open  for  a closer  relationship 
in  tbe  securities  business 
with  Nomura,  the  country's 
largest  brokerage,  through 
further  tie-ups  in  the  future. 

The  main  pillar  of  IBJ's 
strategy  is  its  brokerage 
ann.  IBJ  Securities,  which 
will  concentrate  on  whole- 
sale clients.  It  will  also  be 
responsible  for  tbe  group's 
overseas  securities  business. 

IBJ  considerably  strength- 
ened its  second  pillar  - a 
newly  formed  brokerage, 
which  has  combined  New 
Japan  Securities  and  Wako 
Securities,  two  second-tier 
brokerages.  The  merger, 
which  created  Japan’s  fourth 
laigest  securities  house  after 
Nomura,  Daiwa  and  Nikko. 
•wm  focus  on  domestic  mid- 
dle-tier retail  clients.  iBJ  and 
IBJ  Securities  have  a com- 
bined stake  of  25  per  cent  in 
the  company. 


The  final  pillar  is  a deriva- 
tives Joint  venture  with 
Nomura.  ”It  will  bring 
together  Nomura’s  expertise 
in  equity  and  debt  deriva- 
tives, and  our  screi^ths  in 
credit  derivatives.”  said  Mr 
Nlshimura. 

IBJ's  announcement  high- 
lights the  pressures  on  the 
Japanese  securities  industry 
as  Big  Bang  reforms  con- 
tinue to  be  rolled  out.  The 
liberalisation  of  equity  com- 
misskms  in  October  Is  expec- 
ted to  inflict  damage  on 
small  and  medium  sized  bro- 
kers who  depend  on  commis- 
STOD  revenues. 

While  IBJ's  strategy  has 
created  a potentially  awk- 
ward situation  where  its 
securities  arms  will  be  in 
direct  competition  with 
Nomura.  Mr  Nlshimura 
brushed  aside  concerns. 
”We*ve  agreed  to  compete  in 
the  midffie-tier  retail  market. 
The  New  Japan-Wako 
merger  took  place  because 
without  radical  restructur- 
ing. they  might  have  gooe 
under  (in  a fully  liberalised 
market  J.  ft  bad  nothing  to  do 
with  Nomura." 

“For  tbe  time  being,  [the 
IBJ  group  and  Nomura]  have 
decided  to  conduct  their 
securities  business  sepa- 


Bad  loans  hit 
Philippine  banks 


By  Tony  Tass^  ki  Manila 


Masse  Nitfihniira,  ready  to  consider  further  dsab  with  Nomura  AP 


rately.  but  I don't  kuow 
about  the  future.  If  other 
deals  [with  Norauni]  are  nec- 
essary*. we'U  consider  them.” 
he  said. 

In  tbe  meantime.  IBJ  itiid 
Nomura  have  ,'ils)  linked  up 
in  the  pensions  ,’irena  Lo  cre- 
ate a record-keeping  systems 
managemont  joint  venture. 
The  move  reflects  the  atten- 
tion the  market  has  recently 
been  receiving.  Many  finan- 
cia]  institutiorLs  believe  that 
the  creation  of  u US-style 
401k  defined  contribution 
pensions  nicirket  will  provide 
them  with  immeose  opportu- 
nities. as  the  market  is  due 
to  be  liberalised  in  2000. 

Mr  Nishiniurii  said  that 
Goldman  Sachs,  the  US 
investment  bank,  bad  infor- 
mally decided  to  participate 


in  the  joint  venture.  (}old- 
man  yesterday  said  they 
were  ‘‘seriously  considering 
the  IBJ-Nomura  proposal”, 
but  had  not  made  a final 
decision. 

IBJ  and  Nomura  have 
already  attracted  a host  of 
big  names  to  join  in  their 
venture.  These  include  Dai- 
ichi  Life,  Japan's  second 
largest  life  assurer,  and  close 
IBJ  business  ally;  Societe 
Cenerale.  the  French  broker- 
age: Sanwa  Bank.  Toyo 
Trust  and  Bankine,  Sakura 
Bank  and  Mitsui  Life.  Fuyo 
business  group  members. 
Fuji  Bank  and  Yasuda  Life 
will  also  take  part,  while 
other  companies  who  are 
expected  participate  include 
State  Street,  tbe  US  bank. 
NTT.  Hitachi  and  Fqjitsu. 


Two  of  the  Philippines’ 
leading  commercial  banks 
have  reported  depressed 
audited  results,  reflectizig 
the  impact  of  the  Asian  eco- 
nomic crisis. 

Philippine  Commercial 
Intmmational  Bank,  the  sub- 
ject of  intense  takeover  spec- 
ulation. reported  a decline  in 
net  profit  from  3.62bn  pesos 
to  2A7bn  pesos  ($69Am)  in 
1998  after  a heavy  increase 
in  provisions  for  non- 
performiog  loans. 

Such  provisions  rose  46 
per  cent  last  year  from 
2.37bn  pesos  to  3.46bn  pesos. 
Analysts  said  that  while  the 
bank  had  taken  a conserva 
tive  approach  to  provision 
ing.  the  headline  net  profit 
still  came  in  slightly  above 
expectations. 

Ismael  Pill,  analyst  with 
Indosuez  WI  Carr,  said  the 
bank's  audited  statements 
also  indicated  that  PCI 
Bank’s  uon-performing  loan 
ratio  had  dropped  to  8.0  per 
cenL  a marked  improvement 
from  the  12  per  cent  reported 
at  the  end  of  the  third 
quarter. 

Meanwhile.  Philippine 
National  Bank  has  reported 
a sharp  dive  into  the  red 
with  a loss  of  7.2Sbn  pesos  in 
1998  compared  with  a 1.14bn 
pesos  profit  the  previous 
year.  ITie  audited  loss  was 


even,  greater  than  the  Sbn 
pesos  unaudited  deficit 
disclosed  in  January. 

PNB,  a government- 
controlled  bank,  is  widely 
considered  one  of  the  largest 
problem  areas  in  the  Philip- 
pine baokiag  system,  and 
bad  earlier  flisclnsed  unau- 
dited profit  and  lo^  state- 
ment figures.  PNB  said  the 
loss  refiected  a rise  in  loan- 
loss  provisions  from  lA5bn 
pesos  in  1997  to  8A8bn  pesos 
for  1998. 


ERRATA 

The  number  of  shares  with  voting  rights  representing 
at  least  1%  of  the  share  capital  of  INA  S.P.A..  with 
registered  office  in  Rome,  Italy,  Via  Sallustiana,  51 
necessary  to  present  a list  of  candidates  for  the  board 
of  Directors  and  the  board  of  Statutory  Auditors  in 
view  of  its  Annual  General  Meeting  to  be  held  on  29 
April,  1999  on  first  convening  and  30  April  on  second 
convening,  is  equal  to  40,021,291  instead  of  the 
number  of  no.40,002,129  as  published  by  this 
newspaper  edition  of  5 April,  1999. 


Deutsche  unveils  Australian  sale 


By  Gwen  RoMneoii  In  Sydney 


Deutsche  Bank's  Australian 
arm  is  today  esq^ected  to 
publish  detail.s  of  its  pro- 
posed sale  of  the  Australian 
investment  banking  and 
funds  management 
operations  of  Bankers  Trust. 

Deutsche  Bank's  decision 
to  proceed  with  the  sale, 
after  earlier  backtracking, 
paves  tbe  way  for  a plann^ 
change  in  its  Australian 
management  - including  tbe 
app^tment  of  the  first  Aus- 
tralian to  bead  Deutsche 
Bank  Australia. 

Deutsche  Bank,  which  is 
completing  its  S10.lbn  giobal 
takeover  of  Bankers  Trust, 
has  changed  its  mind  at 
least  twice  on  the  future  of 
ST'S  Australian  operations. 
Last  month.  It  reversed  a 
decision  to  retain  BT  Funds 
Uauagement's  successful 
Australian  operation  and 


allow  local  management  to 
run  it  alongside  tbe  lucal 
operations  ol  Deutsche's 
Morgan  Grenfell  global 
funds  management  arm. 

Instead.  Deutsche  Bank 
said  it  would  sell  both  BT.« 
funds  management  and 
Investment  banking  busi- 
nesses together  or  .•sepa- 
rately. 

Amid  complex  negoUa- 
tjons  to  bed  down  the  global 
Deutsche-BT  merger,  the 
decision  to  sell  off  all  BT's 
Australian  operations  gener- 
ated heated  debate  between 
BT  and  Deutsche  Bank  extic- 
utlves.  as  well  as  within 
Deutsche's  top  ranks. 

BT’s  Australian  funds 
management  business,  with 
more  than  A$41bn  (USjSSbn) 
of  assets  under  management, 
is  one  of  the  most  successful 
in  Australia's  growing  mar- 
ket, ranking  second  to  AMP 
in  terms  of  total  market 


share.  The  group's  invest- 
ment banking  operations, 
however,  have  drawn  little 
interest  in  a market  that 
analysts  commonly  describe 
os  ‘‘overbanked*'.  Estimates 
have  ranged  from  AS300.0Q0 
upward.  In  a single  sale, 
however.  BT's  combined 
Australian  operations  could 
fetch  as  much  as  A$2.5bn- 
Sahn.  analysts  said. 

Deutsche  Bank  has  denied 
reports  that  it  had  decided  to 
link  BTs  Australian  invest- 
ment banking  and  funds 
management  businesses  for 
a single  sale.  While  a single 
sale  would  be  preferred,  a 
"wry  serious  offer"  for  the 
funds  management  opera- 
tion would  be  given  serious 
consideration,  Deutsche 
Bank  said.  Australia’s  top 
four  banks  as  well  as  .some 
US  investment  banks  are 
Understood  to  have 
expressed  interest  in  BT's 


funds  management 
operations. 

Deutsche  Bank  would  not 
comment  on  the  reasons  for 
tbe  two-week  delay  in  the 
infurmatloD  memorandum 
for  the  sole. 

The  sale  has  cleared  the 
way  for  changes  to  Deut- 
sche's Australian  manage- 
ment. Prom  June,  Maurice 
Newman,  the  chairman, 
would  be  replaced  by  deputy 
chairman  Clive  Smith,  wlfile 
Klaus  Albrecht,  managing 
director,  would  be  replaced 
by  Ken  Borda.  head  of  insti- 
tutional banking  and  the 
first  Australian  to  run  Deut- 
sche’s local  operation.  Mr 
Newman  would  resign  as 
chairman  and  take  up  a con- 
sultancy role  with  the 
bank's  Asian  operations, 
working  on  the  merger  of 
BT's  Japanese  funds  man- 
agement with  Deutsche  Mor- 
gan Grenfell  in  Japan. 


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financial  times 


THURSDAY  APRIL  $ 1999 


Gold  Fields  links 

with  Driefontein 


BvVIcfelllUtotin 


- 


9v*^- 


Sh^olders  in  Gold  Fields 
ana  its  associated  company 
Driefontein  Consolidated 
One  of  South  Africa’s  richest 
have  agreed  to  com* 
bine  the  two  to  form  an 
enlarged  Gold  Fields  that 
will  be  the  world's  second 
biggest  gold  mining  grcrnp. 

agreezaent  ends  years 
cd  wran^ing  over  ownership 
of  Driefontein  - once  dubbed 
the  “Northern  Ireland”  of 
the  South  African  gold 
industry  - and  puts  an  -end 
to_  protests  by  the  mine's 
minority  shareholders. 

Uinorities  have  recentiy 
complained  that  tb^  inter- 
ests were  being  ignored  as 
Gold  Fields  and  the  Angin 
American  conglomerate 
negotiated  with  each 
oyer  Driefontein’s  future.  Of 
Dri^3ntemlB  Tnjnnrjfy  share- 
holders, 77  per  cent  voted  in 
&VOUT  (tf  the  deal  yesterday. 

As  part  ai  a series  of  trans- 
actions, AngloGold,  An^’s 
gold  mining  arm  and  the 
world's  biggest,  has  given  up 
Its  fight  to  retain  a share  of 
Driefontein  and  will  sell  its 
21.5  per  cent  stake  to  Gold 
Fields.  An  earlier  proposal  to 
buy  out  minorities  and  split 
the  mine  60:40  between  Gold 


Fields  and  AngloGold  has 
been  dropped.  - ■ 

"Driefontein  was,  until 
today,  the  last  significant 
captive  of  the  old  South  Afri- 
can mining  house  system," 
said  Chris  Thouqisoa,  Gold 
Fields  chairman.  "This 
transaction  brings  Driefon- 
tein on  to  the  world  stage.” 

Tom  Dale,  Gold  Fields 
manasing  director  and  Drie- 
foQtein  chairman,  said  the 
new  cnmpgmy  had  “a  moK 
competitive  pronie  than 
eith^  of  its  predecessors”. 

The  new  company  will 
produce  more  than  4m 
ounces  of  gold  a year  at  an 
average  cash  cost  of  about 

$200  an  ounce,  and  hac 

proven  and  probable 
reserves  of  96m  ounces. 

The  deal  agreed  yesterday 
to  create  an  R12bn  <glA4bn) 
company  involves  Driefon- 
tein tak^  over  Gold  Fidds 
and  then  renaming  itself 
Gold  Reids. 

AngloGold  says  it  win  use 
the  Ri.8bn  proceeds  frcan  the 
its  Driefimtmn  stake  sale  to 
expand  its  other  gold  intep 
ests.  Bobby  Godsdl.  Anglo- 
Gold chief  executive,  says  be 
is  satisfied  that  Ms  company 
does  not  need  Driefbnt^ 
shares  to  ensure  co-opera- 
tion at  the  nearby  Western 
Deep  Levels  ore  body. 


NEWS  DIGEST 


BANKING 


UBS  aims  for  SFrSbn 
from  property  sale 

UBS,  the  Sm^  bank,  yesteitiay  re-affirmed  that  t^ans  are 
under  way  to  sell  hurtdrecte  of  Its  prc^perties  in  SwftzertarKi, 
a move  analysts  as  designed  to  free  up  eqiity  capt- 
ial.  A Swiss  dafly  newspaper  said  the  move  would  raise  up 
to  SFrSbn  ^02bn),  a figure  on  which  the  bank  declined 
•to  comment 

Analysts  said  ^ significance  of  the  money  to  be  raised 
by  the  sales  would  be  diminished  because  tiw  bank  plans 
to  tent  back  a significant  portion  of  die  property. . UBS 
confirmed  that  the  bank  plans  to  s^  roughly  300  proper- 
ties out  of  a total  cMf  about  500  in  its  portfoBo. 

“The  bank  kitends  to  seS  around  300  parc^  In  tiv^ 
years  from  1998  to  the  end  of  2000,*  he  scud.  He  added 
the  total  real  estate  portfbTio  was  backed  by  overSFtlbn 
In  eqt^  capital  ~ 

UBS  reported  at  end-1998  a carrying  amount  for  bank 
prembes  and  other  prop^ties  of  SFf7.7ba  Banks  must 
hold  capttattcebadt  cert^  risks,  deluding  proper^  hold' 
Ings  where  vdoe  can  fluctuate  market  The  bank- 

ing gnxg>  would  pteferto  sen  properties  it  intovls  to  lease 
bade  its^  to  a ar^le  biQrer. 

- Foreign  investors  are  tecpected-  to  be  Keen  to  uae  the; 
opportisvty  to^gdn  a fooEthoid  In  the  Swiss  property  mac^. 
ket  analy^  said.  UBS  said  the  sate  wouM  also  reduce 
the  costs  of  malntalTMng  the  pr^terty.  UBS  sees  an  over- 
lap of  about  170  offices  and  other  admlhislrative  proper- 
jfes  tofienying  cortsofidatibn  of  operatiora  as  a result  cf  Ss 

ifiei^.  Rraters, 

NEW  ZEALAND  

Contact  may  raise  NZ$1.1  bn 

•The  ^tew  Zealand  Govemrnerit  stands  Id  raise  up  to 
NZ$1.1bn($583m)  from  seffing  the  nemairnng  60  per  cent 
: in  electric^  gmerator  Contact  Energy  in  a public  float  this 
monilh.  This  compares  wtto.the  NZ$1.2bn  paid  by  CaTrfor- 
rmn  based  Edison  Mission  fbrthe  ooritrolRng,orcorrwr- 
stone,  40  per  cent  stake  last  month. 

The  goveiTxnent. yesterday  set  an  “intScaflve*  range- of 

between  $NZ2.40  wi  NZ3  a share  tor  its  remaining  stake. 
Edison  Mission  paid  NZ$5  a share.  Government  ministers 
say  the  price  discrepancy  is  because  Edteon  Mfsdon  was 
prepG^  to  pay  rTK)re  for  the  key  shareholding  state 
Critics,  induding  opposition  M1^  say  that  the  pridng 
dHterefitiaite  because  the  governrnyt  is  seeldng  to  virin 
>ntes  by  promoting  a shsra  issue  on  highly  favourable 
teirns  to  “inum  and  dair  in>«sfocs  before  this  yearto  eteD- 

Some  250,000  people  have  responded  to  a vndespread 

advertisHig  campaign  asWnglhem  to  pre-register  ihelr 
interest  to  bui^g  shares.  Corrtad  generates  28  per  cert  of 

New  ^eland’s  electi1dty,through  a-nwetore  of  hydro-elec- 

tricite,  geothermal  and  ^ ferities.  It  also  has  22  per  _ 

cent  of  tiie  retag  declricfty  masket,  and  owns  43  per  cent 

of  the  m^  offshore  Mad  field.  , . _!  . 

Some  360m  shares  are  to  be  floated,  and  BiO  Krrtr, 
Treasurer,  said  he  expected  slrong  irrternational  Interest 
Tev^  HMI,  Wetington 

MECOMiyiUlHCATiOHS 


Telsource  defends  deal  terms 

Tabource;  a consortium  of  SyrisscOT 

, Coms  company  KPN. 

: Irairt  that  made  ft  the  strategtoparfoerrfSn*^^ 

ihd  Czech  tetecom  rnonopoly,  in  order  to  de^ 

..  speculaliorr  aboiit  the  temte  w 

r^nh^tenotNrjgmy^eifous  about  ft,  sawBwwKoit, 

ctSl^raling  oncer  ofSPT-^»^g, 

‘have  deliveiBd  what  we  prornisrt  in  1995^^ 
Swisscorni  which  together  own  M.6  per 

, ^^aUe^ticns  th^  they  paid 

$l'.82bnprivaHsali6h  deal  Ttw  cont^  to 
by  Antonin  Peltem,  the 

when  the 

stejaatPI owns 51  percent  • 

Rob^Andiveoi^Pn^  . . 


JWNIlfe 

Nickel  priced  hif tramet 

pubUc  sector  wfterestfc  Dawd  Owen*  _ 


COMPANIES  & FINANCE:  INTERNATIONAL 


25 


Emergency  treatment  pays  off  for  P&U 

The  revamped  pharmaceuticals,  group  1s  finding  favour,  writes  Tracy  Corrigan 


PhanMcia  & Ufdoho 
became  a byword  for 
disastrous  mergers  -in 
tbe  plianiiaceutlcals  indos- 
I17  after  the  ISdS  marrla^  of 
two  of  the  industry's  also- 
rans  fidled  to  deliver. 

By  the  time  Fred  Hassan 
was  brou^t  in.  from  Ameii- 
can  Home  Products  in 
1997  to  recue  the  strag^mg 
company,  i£  was,  Mr  Hasan 
notes,  “in  some  danger". 

But  last  year  Mr  WftMan 
produced  the  required  tma- 
round,  achieving  the 
doublendi^  earnings  growth, 
he  had  promised,  and  pledg- 
ing more  of  the  same.  The 
share  price  has  recovered 
from  a low  of  $28%  in  April 
1997  to  a recent  high  on 
March  29  of  $63A-  And  ana- 
lysts are  enthusiastic:  last 
week  Salomon  Smith  Barney 
put  the  stodt  on  its  “buy” 
list 

Mr  Pmegan,  a 52-year-old 
native  of  PaUstan,  took  the 
risky  option  of  ratiwr 
tiian  wait  for  the  top  slot  at 
AHP-and  has  “reinvigorBted 
the  compiuiy”,  says  Mariola 
Haggar,  pharmaceuticals 
analyst  at  Deutsche  Bank 
Secinities. 

Alex  Zisson,  analyst  at 
Bambredit  A Qulst,  says  Mr 
Hassan  faced  two  main  prob- 
lems: a very  old  pipdine  and 


far-fiung  operations.  The 
first  problem  tedifBcult  to 
pjiangft  ipilckly  in  a.pbanna- 
ceoticals  eoihpeny.,  wltere 
new  drugs  take-years  to 
develop.  But  Mr . Hassan 
moved  rapidly  to  tackle  the 
secmid,  al^  with  the  cul- 
tural  probtems  that  accom- 
panied the  geographical  dis- 
persal 

inihen  be  took  over,  P&U 
had  operational  centres  in 
.Ealamasoo,  Michigan  (the 
old  Upjolm)i  Milan  . and 
Stockholm  (the  Phannacia 
legacy),  whidh  he  admits  had 
turned  into  “flerdoms”,  as 
wen  as  a sb^  headquarters 
in  Windsor,  near  London. 

“It  was  almost  like  three 
oompaiues  held  together  by 
a oCEIce.  in  Windsor.” 
Mr  Wg-gmn  iwplains. 

He  rapidly  identified  a 
“lack  of  unity  of  man- 
agement”, exacerbated 
by  a lack  of  transparency 
and  a culture  of  shifting 
blame. 

At  his. first  board  meeti^ 
he  proposed  that  a main 
business  cmitre  - re^onsi- 
ble  for  global  research  and 
devd<^ent  and  systematic 
^olml  marketing  - should 
be  consolidated  in  one  loca- 
tion. 

*T  really  like  to  take  about 


six  months  to  come  out  with 
plans,  but  this  was  a patient 
in  serious  need  of  attention.'* 
he  recalls. 

New  Jersey  was  chosen 
because  “the  global  pharma- 
ceuticals industry  has 
migrated  in  that  dir^on  in 
the  last  few  years",  says  Mr 
Hiassan.  P&U  was  also  keen 
to  increase  the  proportion  of 
profits  earned  in  the  US  - 
then,  at  one-third  of  the 
total,  wen  below  the  indus- 
try norm  of  about  haU. 

The  concentration  of  drug 
companies  in  New  Jersey 
also  made  it  easier  to  attract 
hlgb-calibre  staff  to  what  is 
still  a second-tim'  company. 

Analysts  identify  Mr  Has- 
san's  ability  to  inject  fresh 
blood  into  the  conqiany  as 
one  of  his  successes.  Five  of 
the  eight  executive  commit- 
tee members  were  hired 
since  his  arrival.  He  also 
expanded  the  US  sales  force, 
reversing  a cycle  of  cutting 
costs  on  the  back  of  foiling 
revenues. 

While  the  process  of  push- 
ing new  products  throu^ 
the  pipeline  is  necessarily 
slow.  Mr  Hassan  looked  for 
ways  of  noproving  focus  on 
PVisting  products.  At  the 
time  “around  60  per  cent  of 
our  promotional  resources 
were  allocated  against 


a ' long  tall  of  products". 

Mr  Hassan  introduced  a 
“freshness  index"  to  mea- 
sure the  percentage  of  sales 
comii^  from  products  intro- 
duced in  the  past  five  years 
- it  has  risen  from  17  per 
cent  at  the  teid  of  1997  to 
22  per  cent  at  the  end  of 
1998,  and  be  says  the  com- 
pany is  cloeixig  in  on  its  goal 
df  30  per  cent  by  2000. 

The  P&U  chief  has  also 
“done  a good  job  of  sMl- 
ing  off  non-pluuiDa  busi- 
nesses” such  as  nutrition, 
says  Mr  Ssson.  There  have 
been  six  divestitures,  leaving 
the  company  with  only  3 per 
cent  of  its  business  outside 
pharmaceuticals.  Its  diagnos- 
tics business  will  dther  be 
sold  or  developed  in-house, 
Mr  Hassan  says. 

In  the  longer  term,  be 
believes  he  can  improve 
P&TTs  idpPUne  as  he  did  at 
AHP  after  joinii^  in  1989. 
This,  according  to  analysts, 
is  the  chaneoge  he  still 
foces  in  ponvinc^  investors 
that  recent  aarriiwgs  growth 
is  sustainable.  But  some 
early  paybacks  are  posable. 

A cancer  drug  amiable 
for  some  time  in  Europe  is 
on  fost-track  approval  in  the 
US,  albeit  rather  late  in  the 
drug's  life-cycle,  and  a new 


F¥ed  HassaK 'Tbere  is  no  second  dianee  if  you  go  downhV 


antibiotic  is  also  close  to 
coming  to  market  These  are 
both  in-house  developments 
that  have  not  been  effec- 
tively managed. 

Coimi^  from  the  acquisi- 
tive culture  of  AHP.  Mr  Has- 
san is  also  keen  to  look  at 
potential  targets,  and  points 
to  the  company's  strong  bal- 
ance sheet 

Meanwhile,  the  tumround 
still  has  some  way  to  go.  “I 
keep  teUing  our  enmloyees 
we  cannot  declare  victory. 
We  have  lots  of  possibilities 
yet  to  make  ourselves  best- 


in-class.”  Despite  conven- 
tional wisdom  that  says 
medJum-sized  companies 
will  be  eaten  up  by  consoli- 
dation, “we  don't  believe  size 
is  the  only  way  to  succeed", 
though  tbe  company  will 
move  up  tbe  league  tables, 
he  predicts. 

But  he  adds:  “I  believe 
very  strongly  that  if 
you  are  a mid-sized 
company,  the  quality  of 
management  is  even  more 
important  because  there  is 
no  second  chance  if  yon  go 
downhill” 


A milljon  gears  agft  te  a cave  Ik  fay  dim  sudight 

man  first  maHced  his  presence  In  the  world. 
ArvMHjndng  his  andzdcin  using  Flesh  and  earth. 

Several  hundred  thousand  generaions  taler, 
nahk  dasiie  rem^  steadfast 

Brrf  th^  hrmic  lutM  yif  h^rtpf Smartwi-  toer. 


Tog^ier  they  httre  citoted  hkne^  that  have 

changed  the  world 

And  m the  process,  they  have  Uft  thw  own  marie 
A poelK  drdes  cemputtrs  created  by  rnan, 

used  by  man,  dianging  mankind 


HEWLETT* 

PACKARD 


HP\ten  Copoiaie  PCe  bitof  Pcttnim*  U preceww  3S0  MHi  to  450  MHi  noo  MHr  bu»  Caimki  HP  on  0990  47  47  47. 


1 ■■ 


26 


COMPANIES  & FINANCE:  UK 


BICC  makes  $443m  sale  to  General  Cable 


financial  TIMES  THURSDAY  APKJt  S-lS^  -:  . 


COMMENT 


By  TboroU  Baricer 


BICC,  the  UK  engineering 
group.  Is  to  sell  its  energy 
cables  business  to  Gener^ 
Cable  Corporation  of  the  US 
for  £275m  <$443m),  leaving  it 
to  focus  on  Balfour  Beatty, 
its  construction  arm. 

Hie  price  was  at  the  top  of 
analysts'  ezpectadons  and 
the  shares,  which  have 
underperformed  the  FTSE 
All-Share  index  by  87  per 
cent  in  the  past  five  years, 
rose  11  per  cent  to  104p. 


The  sate,  which  completes 
BICC's  exit  from  energy  and 
telecoms  cables  after  the 
sale  of  its  cotmmmi cations 
cable  business  last  month, 
will  result  in  a loss  on  dis- 
posal of  E370m  this  year, 
mainly  from  a £296m  good- 
will write-off.  It  also  includes 
£25m  of  liabilities  which  will 
be  retained  by  BICC. 

WassalL  the  hybrid  indus- 
trial con^omerate  and  ven- 
ture capital  group  which  had 
a 90p-a-share  bid  for  the 
group  rejected  last  month. 


responded  by  saying  it  bad 
made  a renewed  indicative 
offer  of  ilOp  to  the  BICC 
board  on  April  1,  which  was 
not  put  to  shareholders. 

Alan  Jones,  BICC  chief 
executive,  said  the  board 
had  considered  the  revised 
offer  and  decided  it  could 
not  accept  it. 

Wassail  ruled  out  a hostile 
bid  and  said  ilOp  was  the 
hipest  price  it  could  justify 
on  its  current  information, 
but  did  not  admit  defeat.  It 
said:  "We  could  put  an  offer 


of  IlOp  on  the  table  tomor- 
row. We  hope  that  share- 
holders will  agree  that  ItOp 
in  cash  is  wonh  more  than 
the  current  position." 

The  sale  is  conditional  on 
approval  at  the  annual  meet- 
ing on  May  5. 

Energy  cables  made  pre- 
tax profits,  excluding  excep- 
tiooals,  of  £2Sm  in  1998  from 
turnover  of  gl.lbo. 

Mr  Jones  said  there  was 
no  sign  of  an  improvement 
in  the  energy  cable  market, 
which  had  been  dogged  by 


overcapacity  and  the  sale 
would  remove  the  earnings 
uncertainty  which  had  been 
hanging  over  the  group. 
BICC  has  taken  charges  of 
more  than  £200m  restructur- 
ing its  commodity  cables 
businesses  in  the  past  four 
years. 

He  admitted  the  deal 
would  be  earnings  dilutive 
in  the  short  term,  until  the 
proceeds  were  reinvested 
and  savings  of  £5m-£10m 
began  to  come  throu^  next 
year  from  the  closure  of 


regional  offices  and  some 
head  office  reductions. 

The  sale  proceeds  would 
be  used  to  reduce  debt,  leav- 
ing It  with  net  casta  of  about 
£5(hn. 

The  deal  would  make  Gen- 
eral Cable,  spun  off  from 
Wassail  two  yean  ago,  num- 
ber three  in  the  global  elec- 
trical and  communications 
cable  industry. 

BICC  was  advised  by 
Schroders  and  General  Cable 
by  Merrill  Lynch  and  ING 
Barings. 


A split  that  could  signal  the  last  gasp  of  the  old  guard 


Reed  Hsevier  has  just  lost  one  new  chief 
executive  before  he  even  started . . . John 
Gapper  examines  six  years  of  board  tensions 


A tear  in  the  paper 


It  is  not  the  best  job  adver- 
tisement After  six  years  of 
board  tensions  that  have 
occasionally  flared  into  out- 
right conflict,  the  Anglo- 
Dutch  publisher  Reed  Elsev- 
ier is  once  again  seeking  a 
chief  executive.  It  has  also 
lost  the  services  of  Pierre 
Vinken,  one  of  the  architects 
of  the  1993  operating  me^er 
of  Reed  International  and 
Elsevier,  who  resigned  as  a 
non-executive  in  protest  at 
the  way  an  earlier  search 
had  been  conducted. 

The  culmination  of  the 
search  was  due  this  week 
with  the 

Jonathan  Newcomb,  chair- 
man r-ypps  executive  of 
Simon  & Sdinster,  the  US 
publisher,  would  become 
Reed  Elsevier's  first  sole 
tdiief  executive. 

Instead,  Mr  Newcomb 
turned  the  job  down  and  Mr 
Vinken  not  only  resigned 
but  said  David  Webster, 
ehairman  cxf  the  UE  retailer 
Safeway,  who  led  the  search 
committee,  should  have 
Ihllen  on  his  sword. 

Reed  Elsevier  now  finds 
itself  in  a potenthdly  unsta- 
ble porition,  with  the  posti- 
bflity  that  its  merger  with 
Wolters  Kluwer,  called  off 
last  year,  could  now  be 


RESULTS 


revived  as  a reverse  take- 
over by  Wolters. 

ff  Reed  Elsevier  was  more 
in  ftivour  with  investors,  a 
slip  like  losing  its  main  can- 
didate for  chief  executive 
might  be  for^veu.  But  the 
sto^  market  is  also  con- 
cerned about  its  specialist 
publishing  operatiaas. 

Nor  can  the  acrimooious 
resignation  of  Mr  Vinken 
and  Loek  van  VoUeuhaven  - 
another  non-executive  - on 
Tuesday  be  dismissed  as  a 
freak  event  For  Mr  Vinken. 
a TSf-year-old  former  brain 
surgeon,  in  many  ways  per- 
sonified the  Dutch  half  of 
the  coomany.  He  was  due  to 
step  down  next  week  at 
Elsevier's  annual  meeting, 
as  Reed  Elsevier  finally 
moved  to  a unified  board 
and  management  structure; 
but  instead  of  accepting  the 
usual  plaudits  on  his  retire- 
ment, the  joint  statement 
issued  by  Mr  Vinken  and  his 
fellow  non-executive  on 
Tuesday  pulled  no  punches, 
saying  the  company  should 
have  found  itself  a chief 
executive  by  now,  having 
started  the  search  last 
August.  "In  our  view,  (Mr 
W^Mter]  should  have  drawn 
the  necessary  conclusions, 
and  resigned.  Despite  our 


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urging,  he  has  declined  to  do 
so.  We  were  not  prepared 
any  longer  to  accept  respon- 
sibility for  this  state  of 
affairs,"  they  said. 

The  row  is  the  latest  of  a 
series  of  events  that  have  led 
to  underperfonnance  in  the 
shares  of  both  holding  com- 
panies. For  the  past  two 
years,  investors  have 
become  Increasingly  dis- 
mayed at  slowing  earnings 


growth,  partly  caused  by 
mishaps,  such  as  the  over- 
statement of  travel  title  ci^ 
culation  figures  discovered 
in  1997,  and  partly  by  the 
need  to  invest  in  electronic 
distribution  of  data. 

Some  close  to  the  company 
argue  that  Mr  Viuken’s 
departure  has  lanced  a bml, 
and  will  clear  the  way  for 
Reed  Elsevier  to  emerge 
from  the  compromise  cre- 


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ated  in  the  1993  merger. 

"Corporate  governance 
committees  say  retired  exec- 
utives shou)d  not  serve  as 
non-executives  because  it 
only  ends  in  grief,  and  Pierre 
and  Loek  prove  that  in 
spades,*  says  one  person 
close  to  the  board. 

Reed  and  Elsevier  were 
brought  together  by  Mr  Vin- 
ken  and  Peter  Davis,  chief 
executive  of  Reed  Interna- 
tional, after  a long  dalUanoe 
between  Elsevier  and  Pear- 
son, owner  of  the  Financial 
Times,  broke  down  in  1991. 

But  Mr  Davis  resigned  Ixx 
June  1994  after  faiUng  out 
with  Mr  Vinken.  who  budlt 
Elsevier  as  a sdentific  pub- 
lisher in  the  1970s  and  1990s 
with  Mr  van  VoUenboven 
after  choosing  publishing 
over  neurosurgery. 

Ihose  close  to  Reed  Elsev- 
ier say  tliat  despite  Mr  Via- 
ken’s  creativity  as  a pub- 
lisher. be  bad  become  a 
destructive  force  within  the 
group,  though  there  was  no 
clear-cut  split  on  Reed  Elsev- 
ier's board  until  Tuesday. 
AO  the  members  bad  agreed 


on  the  need  to  move  to  a 
unified  structure,  and  Mr 
Vinkan  was  a member  of  Mr 
Webster's  nominations  com- 
mittee. 

But  Mr  Newcomb's  deci- 
sion to  r^ect  the  job  after 
prolonged  talks  with  Reed 
Elsevier  was  the  final  straw 
for  Mr  Vinken. 

He  was  also  staring  in  the 
face  the  reality  that  the  old 
Elsevier  was  about  to  disap- 
pear. After  next  week's 
pippKng  the  Dutch  compa- 
ny’s bo^  will  be  identical 
to  that  of  the  merged  group. 

Mr  Webster,  who  has  acted 
as  chairman  of  Reed  Elsevier 
pending  the  arrival  of  Morris 
Tabaksblat  from  Unilever 
next  week,  has  played  a key 
role  in  implementing  some 
of  those  board  changes  over 
the  past  tew  months. 

Mr  Ifinken's  final  act  of 
frustration  with  the  changes 
in  bis  company  may  prove 
the  last  gasp  of  the  old  guard 
at  Reed  Elsevier. 

The  problem  facing  the 
board  is  to  find  a chief  exec- 
utive to  lead  a new  genera- 
tion of  executives. 


Bice 


BICC  has  got  its  letaH^n 
in  first  against  Wassail  by 
fipriiTig  a buyer  for  fiie  part 
of  the  group  that  most  inter- 
ested  this  predator.  But  the  ■ 

price  achieved  for  its  energy  ^ 
cables  operatioo  only  looks 
good  if  it  is  assumed  this 
cyclical  business  will  not 
recover.  BICC  argues  that 
prices  remain  soft,  so  it  is 
better  to  secure  ll  times 
operating  profits  now.  Tte 
deal  would  also  transform  its 
sickly  balance  sheet,  leaving 
about  £50m  in  the  bank.  But 
under  other  circumstances,  a 
price  of  a quarter  sales  and 
well  under  half  net  assets 
would  be  to  shout  about.  The  £870m  loss  to  be.tafteii  ■ 

on  this  disposal  would  represent  a Snal-embarrassme^  £»■ 
the  erstwhfle  British  Insulated  Callend^s  Cabl^  What 
remains  is  another  grand  old  name  of  British  indnsc^,.  tha 
construction  group  Balfour  Beatty,  and  a coiqile  of.smkll 
businesses. 

But  shareholders  need  to  take  a careful  look  at  ^ 

Ing  beast  Market  values  for  the  better  constivcticm  conipa- : 
m&.  such  as  Amec  or  John  Laing,  amount  to  only  20.  per  - 
cent  of  sales.  On.  this  basis,  Balfour  Beatty  would  be  wodh 
£400m-£45QDi.  The  other  parts  of  the  group  would  have  tp'be 
valued  at  one  Hmes  their  £220m  turnover  to-  ju^;^..tiie' . 
current  share  price.  Wassail  seems  to  have  ndssed  its  chance  . 
to  buy  BICC  at  the  bottom,  and  it  clearly  saw  most  iecoy^ 
potential  in  the  cables  side.  Only  inv^tq^-^i^  a'strcnig 
gfnmach  for  coDstTuctioo  iisks  sbould  stick  with  fite-  new 
animal. 

Geiry  Robinson 

Gerry  Robinsoa,  Granada’s  chairman,  has  been  gidl^  ^ 
Ikt-cattery  in  the  past  notably  in  demanding  a ridieDloitely 
juicy  fee  for  his  notice  period  . ln  the  event  of  a - 

takeover.  And  he  is  weU  paid  by  UK  standards,  reoefving  a 
salary  of  £940.000.  which  incr^iaed  a little  too  steady  for 
most  tastes  last  year.  But  his  sale  of  £6.^  of  the  Idare  . 
group’s  shares,  for  a profit  of  more  than  fiSmt-is  no  cause  for 
investor  outrage.  Mr  Robinson  is  not  cashing  oat  ctf  Granada 
altogether.  He  retains  about  £4m  in  shares  aiidvaluabte  .bat' 
unvested  options  worth  a further  £Sm.  Soi  although  alre^ 
fantasticaUy  rteh,  he  retains  some  incentive  to  create  yahie 
for  sbareholdOT.  Since  Granada's  shares  have  rismi  nsexly 
600  per  cent  since  be  became  chiM  executive,  outperieariniiig 
the  market  185  per  cent,  the  fuss  is  overdone.  . 


Otto  Versand 
buys  Freemans 


By  Peggy  HoDliiger 


Philip  Green,  the 
entrepreneur  who  led  the 
group  of  Investors  that 
bought  Sears  for  £549m 
($8B4in)  in  January,  yester- 
day b^an  unbundling  the 
acquisition  with  the  sale  of 
Freemans,  the  mail  order 
divisloa  to  Otto  Versand  of 
Germany.. 

The  price  was  not  dis- 
closed but  is  believed  to 
have  been  £l55m-£170m.  sub- 
stantially short  of  the  more 
than  £350m  Littlewoods  bid 
for  the  group  in  1997  before 
trading  worsened. 

Together  with  the  E140m 
raised  from  the  sale  of  the 
financial  services  business. 


Creation,  arranged  by  previ- 
ous management,  the  sale 
proceeds  go  a long  way 
to  paying  off  the  £450m  in 
borrowings  made  to  si^pcct 
Mr  Green's  bid. 

Sears  will  now  consist  of  a 
retail,  business  which  bad 
sales  last  year  of  £750m,  and 
a property  division  valued  at 
more  than  £134m. 

For  Otto  Versand,  the 
world's  largest  mail  orto 
company  and  number  thice 
in  the  UK  through  its  Grat- 
tan subtidiaiy.  the  acquisi' 
tioD  strengthens  its  bold  os 
the  British  market  fium  8 to 
15  per  cenL  The  deal  merles 
the  end  of  a puisalt  which 
has  lasted  more  ffian  three 
years. 


,gr.=?7r;trvi^ 


I ^ ■ 


r.? 


Specific  Procurement  Notice  for  IT  Systems  for  the  Pakistan 
Audit  Department.  Pakistan 


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CoRSHutioAAMeRue.  leMmatad.  Paktetan 
Tat  00  92.  SI-9224042  Fax:  00  92*  S1.920771S 
Bmalk  arflpQMkGomselsjiat.pk 

5 H»pteiMensinihelfubiicifanstoBiddere«idnttieCenendCendtensarc«iMaiwevie 

proMtam  o(  the  Wortd  Bank  BMdliig  Oocumxnt*  tor  the  Piocuiegiecw  ol  Infcnnmon  S^twiw, 
Etyilpniaot  Software  and  Sendee*.  InMineUmiat  CoeipetWue  BMdlna,  Febniaiy  1998. 

6 A Iwoeiage  bidding  procadweW  be  talewed.  The  Wet  Age  Ud  wM  eonsM  ot 

(1)  eteehnlealbidoniy,i«ttnautanyreMreneetopnce 

(2)  aRyaMmWN«eekjliQncaBldderiiil*hastog|latandte6liniQal)ustftab9n«icreQ(.p(WHdea 
that  auen  ahematiw  aeUlena  do  noi  change  the  basic  oblaave  el  the  prowcL 

7 Suppaere  wto  be  raquMd  to  ndicale  aepnMy  In  ffieo- bids  hew  8iey  would  meei  the  tMoweig 

requMmenia  and,  fci  second  stage  bid,  the  prices  Mr  each; 

(1)  oppiealSon  software  tor  the  *te*r  ate -lade 

(2)  cuffiofntoallanlpanniMBitniieii/implemenMm  aervlees  on  a TesT  machne  to  be  proeuied 
Mpantaly  Mr  that  pupoae  — 1 alic 

|3>  appjCJtownoftwaretertheplenaei-Vsaee 

(4)  paremeteniBlIonAmpleniBntatlon  semces  on  8ie  pdei  see  madwies  wMi  writ  be  procured 
separately  wider  a ssigle  stage  ICB  - 9 seas 

(5)  appheatlsn  software  Mr  die  rol4W  she*  - 22  Mes 

(6)  parameteilsatiemimplentematiBn  seniMas  91  the  rof-oui  Ms  machnes  wltMi  wri  be  proewed 
npmsly  under  a stogie  stage  ICB  - 22  aliei 

(7)  aHAcallon  software  Mr  die  totol  operadon  sttos  - 12a  sues 

(8)  twiranialerteadai/inpluiiwnuriun  semces  on  the  totol  opreatton  sue  madixies  whMi  wW  be 
proewed  separalely  wMW  a lingia  stoge  ICB  - 120  sees 

The  aaffiNare  suppPw  wil  be  reeponatole  tar  M mptemantolian  oT  the  appheabon  software  on  toe 
chosen  htodware  pWtona 

8 Kds  must  be  deftwred  on  or  betore  1030  hours  loeai  time  on  20  May  1999  and  wM  be  opened  ai  Oie 
pteaenea  of  bMdan  or  llMr  raptesantoUves  who  choose  10  attend  « 1045  heure  ioeal  lima  on  2S 
I999tttffieeffieeeet: 

Rroieet  Dtacter  ^iffiA) 

ORtoe  o(  the  Audier  General  at  PaMston.CanslbuilQn  Avenue,  Wtotatoad,  PakWan. 

9 FeOewtog  avafuatten  oT  arsi  stage  btos.  the  Pwchaser  imp  towde  each  BUoar  who  met  the  ouaMesbon 
altona  and  who  has  sutoiWad  a tatomlealty  acneptoWa  IM  stage  bM  to  e CtorOeanen  Meatxig.  dumg 
mMWi  the  Bldder-s  tod  wdi  be  remsed  and  ad  reqund  ehan^  wB  be  noted  and  recorded  to  the 
Mtoutae  or  the  meeting  or  to  the  anwnded  stage  two  Wddwg  documents.  Only  duaUled  Bidders 
sutamining  a eompleto  and  teehnicady  ircaptobto  first  stage  bM  (whitoi  may  have  been  nifcjeaed  to 
todial  testtog  by  PAD)  wa  be  touted  to  womft  a second  stage  tod. 

10  Second  stage  bWtwMeerwsiDt 

(1)  updMed  tetomicM  tod*  ncoipenrbig  al  changes  required  by  die  Purchaser  as  recerted  to  the 
Minutes  or  the  Ciaifltoation  Meetng  or  nerettsty  te  retied  any  tanendmenQs)  to  the  Bddtog 
Doewnenta  or  revlaion*  to  the  taehntaal  specilieatMns  waued  subeequeni  o Pie  subnvssion  or 
tha  first  atage  bide 

(2)  the  oommareWbidifleiilalntogcanvMePrfte  Schedules. 

11  Suppaar*  are  ashed  to  Indicate  ttiespecdMaBon  tor  ate  tiarawareretoJtred  to  rwiaiM- software  wnh  a 
Bsi  or  maefttoea  ewrenay  naming  Bit  apploatiens 

n«{feet  Ofreeter.  FIRM,  OMce  or  the  Auditor  Ganersl  or  Pakisian,  Waoiabad,  Pakfstn 


IL 

?r 


Royal  Residencie  Hypoebeken  B.V.  as  SeUer 
Suter  B.V.  as  Servicer 
Dutch  MBS  99>I  B.y  as  Issuer 

Pass  through  securiiisatioD  of  a portfolio 
of  Dutch  residemial  mortgage  receivables 

Joint  lead  Managers: 

De  Natiouale  Im’estermgsbank  K.V. 

Bear,  Stearns  Intemarional  Limited 
ING  Barings-BBL 

.\rranged  and  siructured  by: 


D«  Natlonale 

Investeriogsbank  N.V. 


£25,000,000 

©g^^Ctiettenham&Gknicester 

Floating  Rate  Subordinated  Notes  due  2005 

NoUca  is  heceby  givea  chat  for  the  m mnntym  hytarast 
pezicxi  from  April  6, 1999  to  Octobei  4, 1999  (181 
foe  Notes  will  carry  an  interest  rate  of  5.62828%.  The 
intecBSt  payable  on  the  relevant  interest  payment 
liate  October  4,  1999  will  be  £2,890.19  per  £100.0(» 
denomination. 


The  Industrial  Bank  of  Japan, 
Limitad,  London 
AeeatBaak 


IBJT 


®&3S: 


I 

■«! 


Notice  of  Payment  of  Dliridend  to  the  Hokfeis  of 

Homestake  Mining  Company 

5.5  per  cent.  ConvertlbteSubofrllnari»dMrrf«re  Duo 

NoKs  IS  hareby  grren  as  loBows 

l NomoWihs  Mtoxiq  Campwiv  has  dedsied  a dtedand  at  tm  QW*s  P« 
Share  on  Its  Common  Stocfc. 

19»  *0 

Atxnao.i99s 

3 “^dividsfxi  IS  payabte  in  cash  omsr  than  out  ol  earned  sui^us. 

Homestake  Mining  Company 

Mvch26.1999 


^ ; 

ii; 

? * 

: 

i 6 


Rnanciai  Times  Surveys 


Landesbank  Baden-Wurttemberg 

Jpr  10,000,000,000  Bearer  Notes 
due  22  April  2026 
Series  35/36 

ISIN  Code:  XS0065248857  / XS0065352915 

NOTICE  (S  HEREBY  GIVEN  that 
for  the  Interest  Period  22  April  1998 
to  22  April  1999  the  interest  rate 
will  be  paid  in  Deutsche  Marks 
value  22  April  1999 
Amount:  DEM  81,652.60 
for  the  denomination  of  JPY  100,000,000 

Undesbank  Baden-Wurttemberg 


Tltts  window 
open. 


Bonhinc  & Firunce  Appointnicfiis 

For  rt,or»  mlcmuton  call; 

Ttl:  -W  171  373  41S3 
F.«;  -13  171  B73  J-331 


PERSONAL 


PUBLIC  SPEAKING 

Tqinhg  anl  speech  wrifro  by 
aMerdwrnnsspeater. 
fsst  lesson  tee 
ly;  (01727861133) 


FT  Exporter 


Thursday  May  20 


For  further  mformation  piease  contact: 

Tracey  Endacott  in  London 
Tel;  +171  873  4356 
Fax:  +171  873  4S62 
Email:  tracey.endacotfr@FT.com 

or  Derek  van  Tienen 
Tel;  +44  1889  5dl  900 
Fax:  +44  1889  591  800 
Email:  DVT_Pubnshing@compuserve.com 


HNANCI^TlMFg 

No  FT,  no  comment. 


?! 


f 


s ^ 

I 

V • 

s' 


s' 


t t 

S*' 

1!^-.  - 

f tj  ’ * 


Hi .' 


financial  TIMES 


■niURSDAY  APRIL 


8 1999  if 


27 


EURO  PRICES 


EQUITIES 


25 


All  eyes  on  ECB  for  interest  rates  cut 


CURRENCIES  & MONEY 


EURO  SPOT  FORWARD  AGAINST  TKE  BIRO 


«pr7 


EUROPEAN  OVERVIEW 
By  iQiozem  MocM 


■* 

i:rr= 


fO 


Evarchzone  markets  closed 
up,-  with  traders  focused 
firmly  on  the  Suropem  Cen- 
tral Bank  as  it  meets  today 
to  decide  whether  to  cut 
interest  rates. 

Jnterest-rate  sensitive 
stocks  such  as  retailers, 
banltfi  and  consumer  cnmpg- 
oies  izoproved  tm  the  qsecu- 


latton,  thou^  other  tectors 
such  as  contiiinl^  talk  cf 

consolidatioa  also  contrib- 
uted to  their  firmness. 

The  FTSB  Eurotop  300 
index  of  Europe's  leadinfir 
stocks  rose  9.65  points,  or 
0.77  per  cent,  to  1^84.20.  TTie 
FTS&  ^loc  index  of  shares 
in  euro-zone  countries 
seined  l&fig,  or  0:61  per  cent 
to  2,886.19.  OUer  strong  sec- 
tors included  hanw  op  2.01 
per  cent,  in^nanoe.  2.81  per 


qbb|i  atm 


cent  better,. and  mining,  up 
a.79  per  cent 
Tim  -food  and  drugs  retail 
sectors  were  among  the 
highlights,  rising  2.38  per 
cent  German  retailer  lletro 
and  Qurstadt  rose  by  two  per 
cent  and  six  per  cent  on 
news  of  consolidation.  BSail 
order  retailer  Otto  Venand 
annonneod  the  acqui^tian  of 
Freemans,  the  maS  order 
arm  ot  British  retailer  Sear. 
Otto  Versand  becomes  the 


■ TWBEiiDitaaiBBOgBiniBESftffFgaetoo-iai 


i 

Oren 

set  price 

Chnge 

»PI 

liW 

EM.WI 

fonleL 

Jm 

97210 

97200 

-OA10 

97220 

97.190 

47109 

192194 

Sep  . 

972BD 

B725Q 

-O01S 

97260 

97235 

38248 

206813 

to* 

Occ 

97J0O 

97260 

-OOlO 

97405 

97iM0 

16901 

112992 

- 

97205 

97.180 

-OJD10 

67205 

97.165 

22619 

98673 

■ nigBo»roEeBouBoaHnwB{LH^  ein  loo-iei 


open 

Seitiglce 

Bwipe 

w 

La* 

Eel  M 

OpiB  M. 

4a 

97210 

97200 

-0210 

97210 

97.185 

47 

105729 

. y" 

Sep 

972SS 

972S0 

-0015 

97235 

97295 

2 

98917 

Dec 

97iMD 

97iM0 

■0010 

97040 

97.040 

3 

83190 

Mar 

97.1to 

97.160 

-6010 

97.195 

97.190 

161 

84059 

SMb 

Pito 

Jib 

sv 

CALLS  - 
Dee 

Mm 

Jm 

Sep 

TO  •— 
Dec 

Mar 

. S7125 
. S72SB 

ai30 

0065 

0.120 

1105 

0.165 

0060 

0120 

0130 

0215 

0256 

97375 
: S75M 

0030 

0010 

0JM5 

0045 

0090 

0210 

0315 

0205 

CUM 

QA20 

F rtemaiis 


te  m.  M Ctt  0 ri0  0.  Mm  ^ ki.  ofe  ibsw  mi  ttw  ■ 

■ Fite  eawrn»piflganBCHmiiB(LiFFg  pope- ns  tifcpQM 

Open  SeBirm  Oenw  Mgi  Low  Ea.  0|nliL 

j«  sonj)  sma  +isji  aooko  29020  33s  swi 

■ siro  sms  1^  Eonmw  in  BBiBc  0P110H  (ffio  eiD  per  kMta  patat 

z7n27»2no285Dano»naioo3(isB 
CPC  P GFCrCPCFCPCP 
Mfr  aB32Q4aiS‘5  1SI-111StaHM«43  - • 

N«n92sz»3i2S4Dispa-m.eBm'e3«iM-  - 
U Hi  walWS  . IVn  d«)  I«n  hMa  16M  . SWKM  ■■■  an  Ml  • MMM  pdcM. 


OTHER  INDICES 


<V(  •' 

k'--. 

r 

ik-' 


Apr 

7 


Apr 
: 6 


Apr 

.1 


1999 

f#  Uw 


9ncncdniieftn 


DiSIUcn  365S5B  363034  li^  36500  326026  3B70C  3433il7 

, OlEmSCtW  38SB41  S6«4.»  «}  SS6S36  33S56  366U6  20023 

MSO  emw.  , , , . n 125069  120.21  125909  115090  131555  5HU8 

; ■Tam*  OnMcnt  He*  InInipaBiift.  ^sui»a  a>  bwmpd  nca  M wiaMIfc 


For  real-time  FTSE  Eurotcip  300  ;r,-i!e/  quotes  call  FT  Cityline  on 
(0906  843  5920,  Calls  arc-  charged  at  GOp  per  mir.ute  at  ail  times. 


I FTS£  Actuaries  Share  Indices 

1 iv!''  - i.  -:a.i:v  ;.r:j  : 

European  series 

Apr07 

M*M  A RopoMl 

Bire 

. oar* 

dwoe 

VWd 

W«|. 

TaM  ntn 

MMaM 

tada* 

% 

PDM 

mn« 

yu 

<a*e  c 

FISEEteiBipSOO 

12B42D 

•ffl.77 

4625 

1.90 

521 

1387J3 

FI8E  antepiOO 

296019 

4004 

41625 

129 

1123 

107424 

FTSBntMlclOa 

106144 

4019 

- 4004 

122 

129 

106SJ5 

FTSEBniad 

123700 

41.18 

. +1446 

226 

622 

125820 

.HSEuraMM  BhMk 

121043 

404* 

4023 

222 

421 

134010 

FISEBaMiiecUK 

126442 

4007 

41092 

225 

3J1 

1391.70 

FRE  SMCtap  100  Hite 

BnOtoe 

131122 

4022 

4067 

126 

226 

134222 

UK 

12S7J3 

4101 

41038 

2.15 

1021 

1to125 

Enrape  EXbwtte 

IMMIM 

4124 

416.71 

124 

724 

- 

Bnpp  eHJK 

129902 

4«20 

■+S28 

1JB 

2.10 

132047 

FRE  EMsiep  Muanr  6mJwi 

RESOURCES 

101035 

<0.13 

4122 

2JS 

329 

106421 

■Mg 

9BS24 

•»3.79 

43524 

324 

2127 

100926 

M&6W 

977.19 

-O01 

-013 

2JI 

222 

100420 

BASttSBUSnOB 

112052 

4070 

47 J9 

zss 

625 

115726 

GhamM 

65097 

4093 

4726 

046 

228 

67090 

Cenetnic8n  & BM  Mrti 

10SSJB7 

4075  • 

. +721 

223 

325 

10B8.13 

AmbyShpr 

931.18 

-1A 

-1&H 

4.15 

3820 

101105 

BDHW.  BBUSIWMS 

117420 

4026 

4059 

223  ' 

520 

120529 

Amomks  « OteOG* 

80087 

4tJ2 

41326 

226 

524 

61742 

OlinHW  hiMrfcM 

99345 

4023 

4032 

225 

020 

1015.18 

BerenOc  4 Bert  fiiBlp 

UBSL16 

4078 

4022 

1J3 

926 

110120 

Engteeitno  & MertMaq 

iono6 

4079 

46A1 

4JI7 

523 

100924 

eyoicu.  IMS  60006 

129102 

-026 

-729 

233 

060 

132010 

Aioawrt** 

94449 

-032 

-229 

230 

023 

95179 

JiBMeiMM  sohMs  TmO* 

137080 

-iJi 

-2422 

227 

020 

138523 

Momne  GONs  qqods 

124245 

-024 

-424 

145 

521 

128178 

nwiiiaiM 

92204 

-lun 

-32B 

245 

1032 

9SZ27 

FoDd  PmliEcn  a PneeaB 

: 85024 

-027 

-241 

137 

141 

69Z24 

NMW 

107230 

41.14 

41226 

120 

000 

108034 

78046 

40.15 

41.16 

1.15 

020 

78343 

Panooei  Cm  & Hm  Pndi  111092 

4025 

4220 

020 

124 

113047 

ftanHcealEali 

117107 

-051 

-606 

1.17 

522 

11819? 

TUacn 

132307 

•tOTD 

t&24 

027 

2075 

137521 

eiGUCALSBIMCES 

133004 

4085 

41126 

123 

4JS 

137924 

DUrtalBB 

60949 

-087 

-525 

124 

020 

61624 

eanenliMBlen 

109743 

4095 

+1045 

121 

324 

112328 

irtuv  BaHM  & HMf 

B&7.0B 

4220 

+2UI6 

123 

8.72 

1010.19 

IMi  S RaeamiifV 

134129 

-aig 

-229 

126 

629 

1261.17 

Dtm.  Me  & BraMOlM 

6SD24 

4093 

+090 

2J2 

3.71 

67920 

Sorport  SfenfeM 

107707 

4120 

41071 

120 

1.U> 

106059 

TfMMMt 

97043 

+120 

+1823 

220 

S.16 

90024 

MiHanjc«.4Biis 

1417.10 

4129 

+2321 

1.» 

046 

1469.10 

Food  & Drag  ReUin 

1061.10 

4223 

-.4t21 

1.72 

021 

1096.15 

y»ip|.ii«m|pi<rjilnue  SBW 

M0O17 

4127 

42129 

126 

043 

142720 

BIEinES 

139107 

4019 

+227 

225 

620 

14SZ23 

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tOBUM 

4016 

412* 

103 

527 

110228 

aet  maMnen 

nam 

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-005 

142 

120 

12792S 

hmk 

0^ 

4073 

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524 

912.12 

FBUMOAIS 

137022 

4126 

+22.46 

225 

B2B 

142117 

Bw*» 

99348 

4021 

41927 

238 

058 

101422 

kttfwtmrm 

100040 

4072 

47.16 

123 

1J0 

102240 

Uh  AeeunDca 

imm 

4221 

425.62 

IJI 

4.S 

115223 

knnlBHX  Camartw 

104420 

43.40 

+3426 

2.17 

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106924 

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733L07 

40« 

4328 

22S 

127 

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specuor  s OHM  M 

1Q2B4S 

4079 

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2.17 

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623 

442 

101049 

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1119J57 

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091 

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1129.19 

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733J8 

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-221 

033 

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UE^s  third  bj^estmafi-order 
company,  with':  a'  market 
share  of  IS  cent 
Eazstadt^ -price  also  rose 
sharply  after  ft  said  safes  in 
Uarcb  had  grown  year  on 
year  by  a better-than-expec- 
ted  10  per  cent 
Analysts' said  this  was  an 
early  sign- that  the  recent 
wa^  increases  and  improv- 
ing consumer  ctmfideaee 
were  feeding  throng  into 
qiwnriing  Jan  Scott'  at  Leh- 


man Brothers  said  them  had 
been  leas  evidence  to  date  trf 
German  consumer  confi- 
dence translating  Into  spend- 
ing flisa,  say,  in  France. 

Consumer  confidence  in 
iTi-anra  higii,  according  to 
data.  French  retailer  Pro- 
modes,  up  €6  to  €582.50^  and 
Casino,  up  €9  to  €82.1(1,  are 
indicattve  of  the  trend. 

Mr  Scott  said:  “The  out- 
look for  consumer  spending 
is  good.  There  have  been 
gaiTi.e  iu  real  W^es  and  thte 
ou^t  to  be  supportive,  espe- 
cially if  interest  rates  are 
cut.”  However,  Martin 
Broofcer  at  Credit  Lyonnais 
SeeuxitieB  said  some  retail 
stocks  are  “expensive  defen- 
sives”. He  added:  “Some  big 
retailers  are  revising  earn- 
ings downwards  and  only 
th^  that  restructure  are 
likely  to  outperfionn  in  the 
medium  term." 

One  fear  in  Germany  is 
that  speculatitei  over  a rise 
in  VAT  may  hit  retailers. 


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Suix  MncM  OWFI  MonMM. 


^ Sharp  rise  in  profit  exdudiiig  Bouygues  Tefecom 
^ Growth  of  Bonygues  Telecom 


The  Board  of  Directors,  meeting  on  30  Mareh  1999  under  the  chairmanship  of  Martin  Bouygues.  reviewed  the  accounts  for  1998  and 
prospects  for  1999. 


e Million 

1998  1997 

Change 

FRF  Million 
1998  1997 

Turnover 

14  7&B 

13884 

97  006 

91073 

PRORT  EXCLUDING  BOUYGUES  TBfCOM 

Profit  before  tax  and  exceptional  items 

504 

392 

*UA% 

3 305 

2 574 

Total  net  profit 

328 

270 

*2ua% 

2154 

1771 

Net  profit  (attrlbuabie  to  the  Group) 

196 

158 

*2*A% 

1288 

1036 

IMPACT  OF  BOUYGUES  TELkCOM 

(115) 

(43) 

n-e. 

(758) 

(281) 

NET  PRORT  (AimBUABLE  TO  TNE  GROUP) 

81 

US 

•29,8% 

530 

755 

Shareholders' acuity 

1998 

1901 

+ UX 

13109 

12472 

Net  financial  debt 

879 

690 

+ 27.4X 

5 763 

4 523 

Turnover  rose  by  6.50  % mainly  due  to  construction 
opersOons  abned  and  service  activities.  The  rise  breaks 
down  as  follows: 

•BuHdN^  and  CM!  Works  remeined  stable. 

•Colas  Increased  by  10  %, 

•Saur  Increased  by  3 %, 

•TFl  increased  by  6 %, 

•Telecommunications  budness  increased  by  170  %. 

In  1998.  International  turnover  emounted  to 
FRF  34.9  billion  (€5.3bn),  up  7.3  K.  The  total  breaks 
down  as  follows:  - 

40% 

17% 

25% 

13% 

5% 

Growth  was  strorigest  in  North  America  (United  States 
and  Canada),  up  45%,  and  in  Europe,  up  17%. 


Europe  (ezei.  France) 
North  America 
Africa 
Asia 

Other  legkms 


All  group  acGvtOes  except  TelecommunicaOcHis  Increased 
their  contribution  to  profit  before  tax  and  exceptional 
Items  wheh.  exeludfrig  Bo^es  Teteoom.  rose  28%  on 
1997  to  FRF  3,305  million  (€504m). 

An  exceptional  profit  of  FRF  387  million  {€59  million)  was 
nsoonfod  - compared  wfth  FRF  521  mHllOfl  {€79  million) 
in  1997  - due  mainly  to  ttie  dilution  profit  from  Saar's 
cai^  increase  at  the  end  of  199B. 

The  press  release  issued  on  22  December  1998 
informed  the  market  that  Bouygues  Telecom's  book  loss 
was  expected  to  have  a negative  impact  of 
FRF  765  million  on  net  Group  results.  The  loss  was  In 
fact  FRF  758  million  {€115  million);  in  1999,  the  loss 
•attributable  to  the  BotbSues  group  is  nke^  to  emount  to 
approx.  FRF  1,300  million  {€198  million). 


WHM.1MMBM 


CMm 
1999  1S96 


<a«|B 


ffiFBBIon 
IQBft  IMft 


The  growth  of  Bouygues  Telecom's  business  should 
continue  in  1999. 

The  Board  was  informed  of  the  rise  in  the  number  of 
subscribers,  turnover  and  the  various  elements 
of  Bouygues  Telecom's  business  plan. 

Bouygues  Telecom  should  reach  the  2,400,000 
subeeriber  mark  in  1999,  for  the  first  time  increasing  the 
number  of  Its  subscribers  by  more  than  a miUion  in  one 
year.  Less  than  three  years  after  launch,  the  oomperiy' 
has  become  a leading  brand  in  terms  of  recognition.  It  is 
the  only  French  operator  not  to  have  any  investments  in 
fixed  phones. 


The  Board  dosed  the  eceounts  of  the  parent  company 
Bouygues.  Net  profit  amounts  to  FRF  453  miiiion 
(€69  million). 

At  the  Shareholders'  Meeting  to  be  convened  on  10  June 
1999,  the  Board  m4U  propose  pa^ng  a gross  dhndend  of 
FRF  25.50  (€3.89)  per  share  and  per  investment 
certificate,  indudlr^  the  tax  credit  of  FRF  8.50  (€1.30). 

This  dlvklend  is  undianged  from  1997.  it  wrill  be  p^d  as 
of  7 July  1999. 


Building  and  Civil  Works  contracts  carried  out  directly  by 
the  parent  company  Bouygues  represent  FRF  6.5  billion 
(€1.0  billion).  The  Board  will  ask  the  Shareholders' 
Meeting  to  contribute  this  branch  to  two  specialised 
companies:  Botiygues  Utiment  and  Bouygues  Travaioc 
Publics. 

The  shares  received  to  exchange  for  this  spirvoff  will  then 
be  contributod  to  Dregages  et  Trsvaux  Publics,  whieh  will 
thus  control  di  Bouygues  (koup  companies  active  in  this 
sector.  It  wTI  be  renamed  *Bouy|^ies  Cttostiifction'’. 

This  new  ofganl^on  will  increase  the  Group's  finandai 
and  accounting  transparent^  by  ensuring  that  its  legal 
orgsnisatton  matdies  its  op^Bdonaf  oripnlsation. 


COMSIBURIOR  . 

102 

102 

+ 02K 

68.9 

66.7 

tam 

53 

&1 

■12% 

382 

365 

nwcDDikni 

4.6 

45 

+ 3.1% 

805 

292 

sanriCES 

- 52 

*5 

+ 104% 

332 

285 

SAUR 

22 

22 

+ 72% 

152 

145 

1F1 

1.7 

15 

+ 4.7% 

122 

WL7 

icrtcomnuilaaiiaM 

12 

05 

X12 

75 

3.9 

enSACTMTIES 

• 

02 

as. 

02 

22 

leiALnilNOVBt* 

155 

122 

+ 2.7% 

iiwa 

905 

sfwtMiMaAMDnrt 

52 

52 

+ 32% 

365 

3*5 

-TMltMnwM-BoiWMTcMamtdtriMidM  • 
CnmeawaM  unonr  ■ BowsM  TMom  iMMtd  at  34X 


The  Board  was  Informed  of  the  resignation  of  Mr.  Antoine 
JeancourtGalignani,  Chainnan  of  and  a Bouygues 
Board  member  of  ten  years'  standing. 

After  thanking  Mr.  Jeancourt-Galignani  for  his 
contribution  to  its  work,  toe  Board  coopted  as  Director 
Mr.  Lucien  Douroux,  Managing  Director  of  Catsse 
Nstionale  du  Crddlt  Agrfcole. 


28 


financial  TIMES  THI^SDAY 


INTERNATIONAL  CAPITAL  MARKETS 


MORTGAGE  FUNDS 


Fannie  Mae 
to  issue  new 
bond  series 


Investors  await  ECB  rate  decision 


BENcmjm 

By  Aifcady  Os&ovsky  ki  London 
and  John  Labate  in  New  York 


By  Khozam  Merchant 


Fannie  Mae.  one  of  the 
world’s  largest  issuers  of 
non-govemment  debt,  is  to 
launch  a new  series  ^ calla- 
ble bonds  designed  to  tap 
investor  demand  for  greater 
liquidity. 

The  first  of  the  callable 
bonds  - which  allow  an 
issuer  to  redeem  bonds 
before  the  maturity  date  at 
an  agreed  price  on  a given 
date,  thoui^  at  a premium 
paid  to  the  holder  - will  be 
issued  rJiia  month. 

Franklm  Raines,  the  new 
chairman  and  chief  execu- 
tive officer  of  Fannie  btee. 
said  the  so-called  Callable 
Benchmark  Notes  win 
nificantly  increase  Uguidity 
in  our  callable  debt  securi- 
ties". 

He  said  one  \be  reasons 
behind  the  initiative  was 
that  in  a low  intm^st  rate 
environment  callable  bonds 
would  offer  a yieW  advan- 
tage. This  would  bete  win 
over  European  investors’ 
scepticism  towards  callable 
products. 

“Investors  are  having  to 
look  for  more  risk,  either  on 
credit  or  interest  rate,  to 
achieve  their  gnaia.  rjiTlahias 
win  be  more  attractive  than 
going  oat  on  the  credit  struc- 
ture,’' he  said. 

Investors  will  be  offered 
foar  structures  under  the 
initiative.  These  are:  Hve- 
year  maturity,  non-call  for 
the  first  two  years:  five-year, 
oon-caU  fiir  three  years;  10- 
year.  non-call  for  three 
years:  and  a 10-year  note 
with  a non-call  element  for 
five  ye^. 

Fannie  Mae,  the  largest 
lender  of  mortgage  funds  In 


WORLD  BOND  PRICES 


the  US.  will  issue  at  least 
one  suf^  note  or  a re-tqien- 
ing  of  an  existing  issue  each 
mcui^  witil  a Tninimum  size 
of  $500m,  and  a threshold  of 
doom  for  a re-openii%. 

The  maturity  Emd  size  of 
the  debut  issue  later  this 
month  is  still  undecided. 
J.F.Moi^an.  Credit  Suisse 
First  Boston  and  Merrill 
Lynch  wQl  lead  manage  the 
first  issue. 

**There  has  been  a bte  pre- 
mium on  liquidity  in  recent 
years.  This  is  not  a ghangp 
in  our  funding  strategy;  it  is 
a change  in  structuring 
liquidity,  in  response  to 
investors’  demands."  said  Mr 
Raines. 

The  initiative  builds  on 
the  success  of  the  agency's 
nonrcallable  benchmark  note 
programme  launched  in  Jan- 
uary i«at  year. 

Since  then  the  agency  has 
issued  11  benchmark  notes 
and  eight  add-ons  to  existing 
bonds  totalling  $55.2Sbii. 

Earlier  this  month  the 
agency  announced  the 
exchange  of  |6.22bo  in 
selected  outstanding  non- 
callable  securities  for  its 
benchmark  notes  maturing 
in  2004,  bringing  the  total 
outstanding  volume  of 
benchmark  notes  to 
$61.92bn. 

“This  initiative  will  allow 
the  agency  to  expand  both 
its  investor  base  for  callable 
debt  and  the  secondary  mar- 
ket. and  ultimately  lower 
funding  costs  for  callable 
debt,"  said  one  banker. 

Fannie  Mae  has  been  issu- 
ing callable  debt  for  more 
Than  a primarily  in 

10-year  maturities  and  out  of 
its  medium-term  note  pro- 
grammes. 


Government  bond  markets 
were  mixed  yesterday  wiUi 
most  euro-zone  investors 
adopting  a “wait  and  see" 
attitude  ahead  of  today's 
decision  by  the  European 
Central  Bank  on  interest 
rate. 

Most  analysts  believe  that 
the  ECB  will  cut  rates  by  at 
least  25  basis  points  today  - 
the  first  Uma  it  would  have 
done  so  since  the  launch  of 
the  euro. 

This  is  expected  to  bolster 
the  short  end  of  the  bond 
market  and  strengtbeo  the 
currency.  Jeremy  Hawkins 
at  the  Bank  of  America  said 


the  sratiment  in  the  market, 
however,  is  one  of  hope 
rather  tt>an  of  certainty. 

Market  anai>^  say  leav- 
ing interest  rates 
uncbanged,  however,  could 
be  damaging  for  the  single 
currency.  A cut  w<nild  also 
indicate  the  ECB  is  prepaid 
to  use  monetary  measures  to 
stimulate  European  ysxwth. 

An  interest  rate  cut  in  the 
euro-zone  would  also  have  a 
significant  effect  on  euro 
outsiders  such  as  Sweden 
and  Denmark,  said  Mr 
Hawkins.  European  bond 
prices  fell  shgbtly  yesterday, 
led  by  the  lO-year  German 
bond  futtire  closing  0.06 
lower  at  itSJB. 

The  CE  gilts  market  was 
also  quiet  as  investors 
awaited  the  results  of  the 


Bank  of  England's  monetary 
policy  committee  today.  Tbe 
consensus  is  that  the  Bank 
will  cut  interest  rates  by  at 
least  25  basis  points.  Tbe  10- 
year  gilt  future  rose  0.04 
117.08. 

US  Treasnries  were  mixed 
in  early  afternoon  trading, 
with  buying  at  the  long  end 
of  tbe  curve.  The  30-year 
benchmark  bond  was  £ 
higher  at  midday  at  96 A > 
sending  the  yield  lower  to 
6.511  per  ceoL 

Shorter-term  issues  fell 
Kai-fc,  with  the  two-year  note 
off  ^ at  99%.  yielding  4.941 
per  cent  and  the  10-year  note 
down  k 97g^.  yielding 
S.128  per  cent. 

“There  were  a number  of 
small  positives  that  helped 
the  market  move  up  at  the 


long  eud,”  said  Kevin  Logan, 
senior  market  economist  at 
Dresdner.  Kleinwort  Benson 
in  New  York.  Among  the  fac- 
tors were  bullish  morning 
comments  by  Federal 
Reserve  officials  as  weD  as  a 
Federal  Reserve  coupon 
pass. 

In  the  afternoon  $7bn  in 
30-year  inflation-protected 
Treasury  issues  were  expec- 
ted to  be  auctioned, 
although  it  had  little  impact 
on  overall  market  activl^. 

Japanese  government 
bond  prices  rose  sharply  yes- 
terday as  a result  of  a better 
than  arpanted  aUCtioD  Of  20- 
year  JGBs,  according  to 
Sally  Wilkinson  at  Daiwa 
Europe.  She  said  the  auction 
of  YSOObn  in  2.6  per  cent 
JGBs  was  almost  twice  cov- 


ered compared  with  1.62 
times  cover  of  the  previous 
of  the  2(hyear  paper. 
The  10-year  JGB  teture  leapt 
82  ticks  to  132B3. 

Ms  Wilkinson  said  the  suc- 
cess of  the  auction  was  pa^ 
ticularly  significant  as  it 
came  at  the  tx^nning  the 
new  fiscal  year  when  inves-. 
tors  allocate  their  funds  for 
the  next  six  months. 

“Japanese  Investors  have 
nowhere  else  to  put  tiieir 
money  and  the  guveniTnetit 
Is  «iTTl  managing  tO  support 
the  bond  market.”  she 
sakL 

Tbe  Bank  of  Japan  is 
tnaaHng  on  Friday  but  it  is 
not  expected  to  announce 
new  measures  for  supporting 

JGBs  given  tbe  present, 
strength  (tf'the  market 


Matif 


Multicanal  lifts 
morale  with 
$175m  offering 


New  international  bond  issues 


NEW  ISSUES 


By  Howard  Luce,  Capdai 
MaikelsEdnar 


Multicanal,  an  Argentine 
cable  company,  yesterday 
furnished  more  evidence  of 
tbe  return  in  investor  risk 
appetite  with  a $175m 
offering. 

Tbe  10-year  bond  - putta- 
ble  at  five  years  - was  Multi- 
canal's  first  international 
offering  since  March  1998 
and  one  of  the  first  corporate 
bond  issues  to  come  out  of 
Latin  America  since  the  Bra- 
zilian currency  crisis  in 
January. 

However,  other  borrowers, 
including  Endesa  and  YPF, 
carried  an  investment  grade 
credit  rating  whereas  Multi- 
canal  is  rated  at  Ba3/BB-*-. 
Tbe  bond,  offered  at  a yield 


of  U'A,  comes  in  advance  of 
sovereign  issues  by  Uru- 
guay, Chile,  Costa  Rica  and 
possibly  even  Brazil.  Tbe 
Korea  Develtqnne&t  Rank  is 
also  expected  to  tap  the  mar- 
kets in  the  near  future. 

NTL,  the  UK-based  tele- 
communications company, 
was  set  to  price  its  £200m 
high-yield  offering  last  niiht 
at  a yield  of  betvreen  9%  and 
10  per  cent  - rou^y  in  line 
with  the  yield  offered  on  the 
hi^er-rated  Telewest  offer- 
ing last  week.  Proceeds  of 
the  10-year  issue  will  refin- 
ance a more  expensive  bond 
Issued  by  Diamond  Cable, 
which  was  recently  acquired 
by  NTL, 

Elsewhere.  Soffnea.  a 
French  bank  majority-owned 
by  Credit  Agrioole,  launched 
a floating  rate  bond  priced 
against  the  overnight  Eonia 


AimM 

CaM* 

Pitaa 

Mtorily 

FM 

SpraM  Book-nnNr 

Dwranir 

m. 

0 

% 

,..te 

■ US  DOUARS 

. 

. ■ • . -J. 

F«d(nt  Horm  Loan  Bontw 

Stan 

5.12S*(5 

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2-3bn 

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(tai)R 

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Jan  2004 

U2SR 

+62f0lFObOq  CSn>S8leman  S8 

Ropi^  o2  Tuncsjie) 

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12JXM 

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inSad 

CTtatoWSriomon  Sfi 

BarsloyK  Baik  pictd.mtt 
MutUcanTMS 

200 

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fd>) 

131«* 

100917 
pa  aw 

Aw  2008 
Apr  2000 

035 

laiMcl 

Barclay*  Capital 
BwMKtonfesra 

LBW  C(ptoi  MtoltoBffA 

100 

6L00 

1009522 

Mw2006 

02^ 

*58(40PBbOq  CSFB 

BMW  UK  CopitallB 

lOO 

4.25 

96945 

2002 

ft»94 

*eO(4MAtoOl)  Cemnwrabart^ 

0 BffiOeM 

m HypodwtonbarMrt 

I.rsbn 

395 

a8.88SR 

Apr  2004 

098R 

+1816(MW04}  ABNA1G  Bank/Draadw 

Deuttetae  AuogtocrBtanlt 

1.Stn 

*.oot» 

te 

JU20GS 

032SR 

ftXSKJscOGI  DatftachWHSBCriAaRB 

CoRunorMnk  AG(m) 

400 

4.7b 

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Aw  2000 

0.40R 

*«O(30JwiO9)  ComnerWMSOIIWVnrburg 

QECCin.8 

350 

3.375 

fl9.845R 

Apr  2004 

095R 

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C0d8  Awteoto  M08UK 

TcM  BAA 

300 

3975 

099S3R 

20Ce 

O30R 

SoAncol 

2S0 

{0 

100.00R 

(^2001 

OOBR 

CrOdlt  T^rieclB  Indeaw 

SBASt 

ISO 

M 

89974 

^3004 

0.15 

Salorrnn  SmM  Bwnay 

■ STEPUMQ 

Holate  IrAl  ftwioeO) 

SO 

A.75 

07.73 

Dm  moo 

290 

nec  ue  GioM.Maiiaia 

■ SWISS  mANcs 

.... 

•-  -s’ 

lAoe 

SCO 

290 

10190 

May  2QM 

1.7S 

WtartuQ  DBer* 

■ CaNARAN  DOUARS 

1 »'•'  *.  r*'  ' 

Canada  Mto  6 Hsq  Co*p84 

500 

S90 

n98SR 

Jin2Q(M 

oisR 

*ia(BI6Ju0q  Mwieho  SaourtilBO 

■ NEW  ZEALAND  DOLLARS 

Wtodpoc  Tat  Sea  SZfiJK  Bn 

100 

890 

1QD94 

Apr2D04 

zoo 

(tec  W GUM  Maiitato 

Rnat  Mm,  non-cana<M  trtaM  stawu  VWU  speaS  (over  iWawart  Qomniiwnt  bencS  at  launch  aupplad  by  lead  rnmgw. 
*LMstad.  t FloBitnqewa  now.  •Sam^nmol  axiqan.  fb  fbwd  MoOar  price  Wax  ahem  at  n-ofiar  taMat  at  FunglSa  wtti 
S4bn.  Rl»  87  oaya  aeouadl  a1)  Mead  today  at  mariot  level,  b)  PunglM  wWi  STSOm.  As  S3  days  aKrijad.  4 Baigble 
Mth  SaoOm  Rts  119  daya  aecmad.  RxertVa  on  1^2/03  at  per.  4 di  1ST4SM  at  par.  dl)  Snnlh  Ltoer  *4fibp  to 

A(r  04.  Own  »9Stop.  w Spnad  raMaa  to  Oamm  piMt  tomto  wtoaa  aMsd.  4 MbaUa  on  ISMoa  W pm.  4 FtatgUa  eM> 
SSOOm.  Rts  £1  acouad.  0 Over  MeipolBiad  yWd.  J|  RawMa  wttfi  SSfXhn.  Rue  61  dR«  aecnjed.  4 Mead  teiWy 
£8-29bp  over  bunds.  D Umq  lal  coupon.  ii4  SitoorMwad.  n}  FtmgBda  «Mi  SAOUn.  SaOea  on  capon  dWCL  4 6onle  -flQbpi 
ol  OeSenitche  PfeixSMte.  4 3-nrith  Eunber  4l0bp.  4 Short  lat  eowxn.  I}  Fia^gde  trtth  GZODnt.  Plua  56  d^  accruad.  4 
FungBea  wth  CSSSOnv  Pta  134  daya  acaxMl 


rate  in  euros.  An  official  at  demand  for  such  products,  basis  point  improvement  in 
Credit  Agricole,  lead  Credit  Agiicole  also  led  a the  euro  swaps  rates  yester- 
manager,  said  it  was  €300m  offering  by  Total.  An  day  morning.  The  spread 
launched  to  satisfy  French  official  ^d  the  offering  had  widened  marginally  after 
and  German  money  market  been  aided  by  a two  or  three  launch. 


BENCHMARK  GOVERNMENT  BONDS 


BH  0wd«  Wd« 


USD  lousn 
ami  tzs.i5?a 

&2SQ  1OU300 

img  ip.isiB 
SJMD  laum 
X7M  9B.7B0U 
SOB  loaasn 
MOP  1WJM0 
1000  1WL770D 
SOM  IHJeW 
1000  I0ia» 
S4W0  107.1878 
<.000  101.4100 
720  122S7Q0 
4000  naxn 

1500  108200 
5000  104200 
020  111000 
1750  flOOlW 
4758  08200 

920  loson 
mo  104500 
620  IOOA40D 
MOO  11S22 

420  121000 
4Sn  MWSBN 
420  12162 

620  laww 
020  11122 
4.12  11SM10 
120  I219T0 
152  2240 
020  1VU02 
irei  0722 
MOD  IQlSBSa 
720  110X154 


BOND  FimiRES  AND  QPH0NS 

France 

■ simooBU.  BOW  aam  fuiibb  swtb  oogom 
Opn  Sebpioe  Qw 


ttpioe  Qw  top  low  Eri.  M.  Dpto  tot 

95S4  4413  902  22  35.790  8125 

952  40.12  _ 


■ U2E  THM  BMP  BOM  OPnCOOl  gWTW 

SHie  GAliS  — ■"  ■" 

ftbs  Ktay  JMI  2 MW 

2 • ' 02  • 

M - 0.13 

2 • ' 0.2  • 

2 - • OJO  • 

EKilMlGriito  ftoiw  hmw torv wa to. fiw wi  mm. 

Gomany 

■ MHKNULBaoRUBHrruRa(anBi)ciai.oooiaooaat  ioo% 


Optai 

Sd1p0a 

GTtoUl 

tVi 

iPto 

at  yd 

Opn  B8 

Jup 

11610 

11603 

-an 

11618 

11493 

SD8851 

91,091 

Sap 

11611 

11611 

-an 

1162D 

11498 

43G 

11979 

■ nmoiHi  ano  auD  (BOBU  HnoB 

(BIBO  C10Q900  IDOSta  « 100% 

Opm 

Sanorin 

cbtaga 

iPta 

Eat  <0 

Ops  kt. 

Jtai 

10648 

10634 

-ai4 

10651 

10628 

176912 

236S1 

Mbp  MMg  - Mm  W all  M 
Mk  lacH  rmM  anMUnwOnd  |HM 


Sduck  oancOM  onFT  MmaM 
. TWb  Mom  **  aw  mMc  aMUM  to  m i£S  oer 


■ iBnwwtBFBwwpoennBtfte*»4jwcioaowiooo»«ii<io» 

Opel  sateta  Ongo  ngh  um  eo.Mi  openw. 

JW  122  tO07  • - 0 ZI4 

■ maMLewBwipoinmBftwy  ioit4j8hciw2o  lowegnoa* 

Open  BHortea  Qai2  MSi  Ice  Bt  id  Opei  tat 

Jw  101J4  *82  • • 0 367 

' iraM  « wr  ptt  e ■ WW  coacenM  «■  KVSei.  m mm  Itoel  igx  av  to  pmm  m 


■ BOTiiawtmuj<aeovT.BOiagw|fwvgBOfTg  unrotto  ^aceBonow; 

open  SWpta  Oow*  W lo»  ».  2 Onn  ki 

JOI  114J0  114JB  -mj4  114J7  114.10  1CC49  922 

Spain 

■ apnoam  srmsH  mm  wnwa  awn  giooiwo 

Dp2  SNptce  QtoWf  Wpi  toe  Bt  Ht  Opeitt 

Jei  982  98.75  *025  9064  9050  14.147  16.034 


■ WOIBIIIIL  6 yBWGa.TWTiaiB(tfre  000.02  lOOBMrilOgb 

Opel  Snpncc  Otoigc  10^  toe  fttml  Span  ic 

to)  10646  -aoi  • 0 9 

■ aoTioaM. « BIT  Hmwg  hsfet  noiow  loooe  gt  looe 

QKR  Ctaea  Glwee  im  Cst  «l  Ctaei  M. 

J2  116.16  117S8  .*02  11623  T17.78  28598  77344 

Sep  117.2  402  • • 0 0 

- toW  tatoB  am  amm  mmr  m Otoa  mm  M av  to  mwh  mi- 

■ urns  OLT  nnwes  (mom  uw)  S10020 12*6  si  i9o% 


US  CORPORATE  BONDS 

IM  S 6 P 

4pr  8 (toe  Oaen  Raiie 

■ BianiB 

MM  erxe  72  A4- 

mre  oens  7.2  a* 

CMC  OSn  62  82 


GEa  0MI7  67S  AM 

Bee  ta  066e  725  A 

COIAFIn  Oms  695  A- 

• MISnMLS 

MUrmi  04«  6l35  bbb* 

Ml  MSI  DBAB  875  M 

OWtoilW  QBR1  679  A- 


FMJK  042  7.14  IM 

SUM  0300  72  NW 

ROM  tens  695  WA 

FC8  006  685  an 

■ B2TIU 

SfentCM  (O01  02  8 

ARB  1ZSR  613  88- 

PW2 062  1675  8- 

m am  8WM  6 MV  itoto  tatato  ememt  t 


US  INTBtEST  RATES 

LB2 


INTERNATIONAL  BONDS 


Dir>  wort  Spto 
BU  M diw  riV  7 

eke  yWd  fU  yu  QhIi 


12JZ71  52  -02  -029  452 

092Se  72  -02  -017  *12 

111282  62  -007  -028  4056 


1163778  188  -007  .4LS1  4078 

1044485  675  -02  -631  4675 

94J03T7  72  -02  -025  4l2 


100020  638  -014  -033  *091 

101992  133  -02  -025  4633 

13E.17M  82  *02  -02  t12 


1060(3  678  -02  -OIO  *064 

101026  612  *001  -019  402 

133282  62  -097  -613  4633 

II82U  50  -02  -615  4657 


1I7T22  02  - - - 

10820  60  ... 
0020  00  - - - 

■m  SeftottoBteimmieeietot 


(tad 

aw  cnpei 


Trewwy  BOk  ad  Bond  YtaMo 

tosneBi— — . T— 

n IMeeai - itawne 

Simteeto 4 41  

0mai—  — 454  10-ym 

- Be  we — 4S7  ahm 


a 

0407 

79SD 

AAA 

1060882 

AM  Ann 

0MI7 

M2S 

AA- 

1049040 

todK 

OVW 

7900 

A4 

IBBJWI 

OtaapRW 

(BfM 

6088 

AA- 

989301 

• 

■-IV 

BwarL-Ok 

(M4 

9300 

AM 

11036B 

T<n0|M0 

05AM 

6500 

AA* 

113ABS3 

BwitoaOa 

07189 

10825 

M 

109738 

OtaWdeBRM 

0MB 

6875 

AAf 

imJETO 

■ tV 

•’  ' 

•;7. 

a 

12A17 

7jB5 

AM 

1183100 

OnMarte 

1207 

7.7S0 

AA- 

1119072 

BrtIWQs 

03A10 

7925 

A* 

109000 

MftaiWRM 

(Bfce 

S9Sr 

AA 

10091B3 

■in; 

a 

om 

X7SD 

AM 

108389 

MCUadOa 

wee 

3JS0 

M 

1039232 

Hldto-Otobw 

Rsm 

6750 

nb 

1067272 

O0BXL 

asm 

1980 

IM 

803218 

mm 

no(WMBiO 

aue 

6250 

AM 

1149860 

Spaki  pOngdora) 

earn 

6790 

AA* 

1169142 

CnOFwdw 

vote 

4.750 

A 

1114454 

urOtapog 

07« 

0910 

M 

1009272 

■ w 

BIDISMBO 

ozm 

6900 

AM 

T039857 

NtaAIWtolT 

Qsm 

6500 

(A 

1059288 

OAaSwni 

0BV3 

rjso 

M 

1062514 

aiACM 

(Ml 

8900 

107.1832 

Turnover  on  LifferanfFMa^t 
the  Zzmdon  andl^deifrii.i 
tives  exnhangas  rose  . 
last  month  but'  jneteiff; 
enhange  came  (dose  to  Qie] . 
levels  dlscl(teed  :by>ihai^ 
Frankfurtrbaeed  ccoopeStorv  - 
last  week.  'J'  - 

liffe  s^.the'averaged^^' 
TinmifMil  value  on  ; 

it  trad^  rose  13  pei  - 

£224bn  in  BfarclL-Ovei^. 
volume  of  traded^isaiSac^'- 
feU  44  per  cen  t on 
1998  to  just  11.9to  -T  :,.ir 
Tbe  annual  declum  .was-’.- 
attributed  to  thie  loss  of  the- 
futures  contract , on  :>the{. 
10-year  German  govamaeat 

boml  to  Eurez;  the  Ftenkflort . 
exchange,  and  to  the  iact' 
Liffe  halved  the  traded  taro*'; 
over  of  Its  £urop^-' 
short-term  ihterrat 
futures  wh^  it  converted 
them  to  the  new  Eurftkcxtf-'-  ^ 
erence  rate  in  January. 

Nevertheless,  Uffe  safil.h  . 
had  an  87  per  cent  twaHriif- 
share  in  the  Eurtbor  .o&j . 
tract  with  a tnnioveT^tf 
3.5m.  Overall  volume; on 
ktetif  rose  by  20  per  certto'- 
I6m  contracts  1^  montti... 
driven  by  lively  tcac^  in 
the  exchange’s  equity  and  y 
index-based  contracts.  . t . 

Trading  in  the  . l(^y^ 
French  government  bbad.- 
future  - the  Notional  - mse! 
by  17  per  cent  to  847.000< 
contracts.  However,  this:was 
still  a fraction  of  the  tuifr^ . 
over  tai  the  10-year  Gennan. 
bond  fiitore  on  Eurex,  tihkh; 
became  the  most  heavily.  . 
traded  futures  contract  hr 
the  world  last  month  with  a| 
volume  of  16m. 

Eurex  also  overtook  the* 
Chicago  Board  of  Trade  last' 
month  to  become  the  burieet, 
exchange  in  the  world. 


Owta  01V  totBri 
W (62  dm  f ' 
fU  US  2 Oato 


693  -602  -616  MS' 
£36  -602  -605  412 
82  -62  -604  *638 
616^  -62  , -023  ^ 40.W 

543  462  -637  4623- 
641  4<UB  -635  4«2( 

521  «62  -62  4)2 
U 402 

523  4«2  -02  4«M 
60  - -02  4l2> 

654  460  mil  4676: 
42  4W 

3.13  -60  -62  469* 
12  -OCn  -tuff  4625' 
646  -601  -612  412 
193  *02  -00  402 


0.43  -00 

0144  -00 
00  -O0 
611  -614 


- -60S 
-00  -02 
-62  4649 
-00  462 


ftwrtt— 76 

Bdtobtotm 0i2 

Ftokito 4{1 

FtoAitodtatotoWM 


UK  BONDS 


fTSE  Actuaries  Govemment  Securities 

Mto  tatkm  MM  tmfi  Itowd  W M Tl 

WG0I  Apr  7 dye  % Wmw  yU  0 

1 upMSiandS  1241  -0.0  229  225  121 

2 5-10  fMTS  (111  17195  -62  325  10  133 

3 19-15  wnm  100  4619  294  20  10 

4 5-15  IMS  Ue  >760  44L02  20  10  137 

5 om  15  705  0 232.47  *635  30  1.23  158 

9 talfloitotoi  0 32(0  4044  394  Z2T  10 

7 M HI)  I0O  *60  294  293  10 


50  -002  -637  4021 
594  -62  -634  4035 

50  -00  -038  4058 
50  -003  -043  4058 

StaMTHnetK  OtoW  Utototo 


0aq 

vw 

TBH 

Raan 

VtoU 

Dwdkn 

tova 

% 

RMWt 

125 

121196 

4.70 

132 

3399 

10 

13S9B 

497 

593 

26U 

195 

148675 

454 

688 

1393 

190 

137496 

498 

692 

4392 

1.23 

158673 

453 

11.87 

2181 

Z2T 

1B86B2 

40 

21.71 

679 

293 

I3BD98 

497 

893 

1090 

MM  004  Acbum 

Aw  7 dipe  % taiewi 

22678  +007  133 

2UM  4623  1.16 

34634  4031  134 

28113  *024  094 

3570  4020  1,19 


UK  Indices 

to  s4  Total  « 

yM  MW  lUyt 

10  117074  1422 
156  14410  850  . 
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Liff, 


financial  TIMES  THURSDAY  APRIL  S 1999 


CURRENCIES  & MONEY 


iVatif ' t 
hit  bv 
Eures 


Money  markets  await  rate  decisions 


WORLD  IMTEREST  RATES 


MCmEY  RATES 

AprT  Ow 


MARKETS  REPORT 


imoest  rate  decisions  about 
to  be  announced  by  centra] 
banks  in  Europe  inflnanAed 
tjadiDir  in  both  the  euro 
sterljng  yesterday. 

Strong  economic  Hai-q  an^ 
tot-CDvering  was  behind  a 
recovery  in  sterling  againet 
die  T7S  dollar  on  the  foreign 
exchange  markets.  The 
pound  strengthened  by  mote 
than  half  a cent,  to  end  trad- 
ing hours  in  London  at 
S1.596  compared  with  tbe 
pravions  da^s  close  of  $i.S8 
on.'niesday. 

The'  eorp  also  strength- 
ened against  the  dollar  - 
from  $1,076  on  Tuesday  to 
$L06  yesterday  - as  peace 
hopes  in  Kosovo  faded  and 
the  market’s  saw  a probable 
■cut  in  interest  rates  by  the 
European  Central  Bank  as  a 
reason  to  take  profits. 

The  biggest  movements 
came  in  the  UK’s  sterling 
interest  rate  fizture  market. 


with  the  front  contract  los- 
hig  six  basis  points  as  news 
that  the  service  sector 
Expanded  last  montta  was 
thought  likely  to  Increase 

the  chance  of  UK  rate 

left  on 

Elsewhere  In  Europe,  the 
Danish  central  bank 
unveiled  healthy  foreign 
exchange  reserve  figures, 
which  traders  said  would 
increase  the  chances  of  a 
further  rate  cut  Uiera 


■ If  the  Bank  of  Eniiand’s 
monetary  policy  committee 
decides  to  leave  rates  on 
hold  today  -■  when  it 
announces  its  decision  at 
11am  GMT  - there  is  the 
potential  for  a violent  mac- 
tion  in  the  money  markets, 
accordii^  to  yvne. 

Ray  AttriO,  an  analyst  at 


POUND  IN  NEW  YORK 


-4JM-  >-AwLCte~ 
1.S97D  imso 

1-Ste  tJSIS 

1-tel  liSID 

1SS77  Yseae 


4Cast  teex  consoltau?.  said ' 
the  mteey  market  was  “very 
vulnerable”  to  a no-change 
decision  by  the  MFC  today. 

“A  no-change  decision 
could  bring  a violent  nega- 
tive reaction  in  the  mon^ 
market  because  the  market 
has  alttedy  priced  in  a two 
25  basis  point  cuts.”  Mr 
Attrin  said. 

But  Ian  Mair.  director 
money  markets  at  Halifax 
bank  is  London,  cautioned 
against  getting  away 

by  the  sell-off  after  the 

strong  service  sector  data. 
”One  figure,  and  some 
people  dive  all  oveir  the 
place,”  be  said. 

If  rates  are  left  on  hold  at 
5.5  pm-  emit.  Mr  Mair  said 
there  could  a shaip  bear- 
teb  reaction.  ”But  we’ve  had 
a lot  of  volatility  in  the  last 
six  months,  some  (tf  wh^ 
has  been  ctenpletely  -wrong,” 
be  said. 


6n  • -• 


Federal  Reserve  and  fellow 
FOMC  member,  was  raassiv^: 
ing.  "Japan  bas  a dffi^t 
road  ahead,  but  they  have  at 
least  made  some  changes 
and  the  worst  is  over,"  Mr 
Parry  said. 

Mr  Stem  said  the  fluting 
is  Sosovo  and  Serbia  had 
not  seemed  to  have  affected 
the  financial  markets,  and 
was  unlikdy  to  be  as  signifi- 
cant for  the  US  economy  as 
the  Gulf  War  was  in  1S90-91. 


Mar 


9ThedbBsr  was  usdtanged 
agaiimt  the  yen  , at  Yl^.l, 
despite  pressure  coming 


from  -euro/yan  trading  else- 
where. - - 

Japan’s  economic  woes 
remain  on  the  Bps  uf  US  pol- 
icy  makers.  -Gary  Stem,  pres- 
ident of  the  MtnneapoUs  Fed- 
eral Reserve  and  a member 
oi  the  FOMC.  said:  "Japan  is 
the  SOd-ponnd  gorilla.  X really 
think  we  need  to  see.  some 
zmprovemeat  in  Japan." 

But  Robert  Parry,  presi- 
dent of  the  San  Priuicisco 


■ The  wagakh  tenge  made  a 
strong  recov^  yesterd^,  to 
the  relief  of  ita  central  baiik, 
only  three  days  after  an 
eftective  devaluation  of  the 
exarrmey. 

Kadyrzhan  Damitov,  the 


lOTHER  CURRENCIES 


Apr?  £ S 

CMl  leS&SiOB  . SU4413U290  - asatn 
HUBim  S74Jn-375SS32MS9Q-235iaD 
kn  47saa-47aue  300000 -sBOOyoo 
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Mho  03117  - oaas  isno  • sjiso 
Itala  408839- 41.1760  f5S2DO-2SJnOO 
UAL  SS5BD-&8833  3S727  - 3S781 


central  bank  cbaitiaan,  said: 
"Overall,  1 think  the  situa- 
tion is  dianginff-  radically.” 
He  said  that  using  fixed 
rates  or  currency  bands 
would  not  be  able  to  protect 
the  country  from  external 
economic  ah<v^ke_ 

The  tenge  had  plunged 
from  882  against  the  US  dol- 
lar last  Fridsv,  to  150  on 
Tuesday,  after  the  govern- 
ment in  Almaty  ammunced 
it  would  Btop  its  pcAky  of 
intervention  In  the  foreign 
exchange  markets. 

Yesterday  the  we^hted 
average  of  the  official 
exchange  rate  rose  to  iifi 
to  the  dollar,  helped 
partly  by  the  r^dv^  calm 
domestic  reaction. 

The  People  Savings  Bank, 
the  largest  retail  bask  in  the 
country,  reported  tew  signs 
of  panic  following  the  deval- 
uatiem  - an  attitude  helped 
by  the  government’s  deci- 
sion to  convert  savings  into 
dollars  at  the  old  882  rate  if 
the  savings  were  held  for 
nine  mwithg 


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Insurance  * Reinsunnoe  • Frendal 
SOLUTIONS 
www.xLbm  • NYSE:  XL 


- 4 


* 


30 


FINANCIAL  TIMES  THURSDAY  APRIL  8 1999 


COMMODITIES  & AGRICULTURE 

mangoes  crop  has  benefited  from  ideal  growing  conditions 


Indian  harvest  expected  to  reach  11m  tonnes 


BvXmalltosBhCsIeona 

India,  which  produces  nearly 
^ pnr  cent  or  the  world's 
mai^oes,  is  to  harvest  a 
bumper  crop  of  about  llm 
tonnes  In  the  current  }rear. 

Production  was  just  about 
Sm  tonnes  in  1998  due  to 
unseasonal  rain  and  an 
unduly  long  cold  spell. 

"The  growing  condition 
has  been  ideal  this  year. 
Very  warm  days  and  cool 


nights  led  to  large-scale 
flowering  in  mango  trees 
and  unlike  last  year  only  a 
small  portion  of  the  crop  has 
been  hit  by  pests.  We  have 
been  noticing  some 
impro\‘ement  In  pre-harvest 
crop  mam^meat,'*  said  an 
offlctal  of  the  Agricultural 
and  Processed  Food  Products 
Export  Development 
Authority. 

According  to  trade 
officials,  mango  prices. 


which  rose  to  record  levels 
last  year,  will  fall  sharply  as 
the  new  crop  starts  arrlviz^ 
in  large  quantities  in  the 
nest  few  weeks.  ' 

In  the  big  mango- growing 

states  of  Andhra  Pradesh, 
Uttar  Piadei^  Maharashtra 
and  Karnataka,  the 
Iruit-bearing  trees  have  been 
auctioned  at  "less  than 
one-third  the  rates  of  last 
year”. 

Prices  will  remain  low 


even  if  nOfth-mst  winds  and 
hailstorms  cause  some 
damage  to  the  crop.  I^ade 
officials  say  the  price 
collapse  in  a bumper  crop 
year  is  also  triggered  by  the 
''lack  of  proper  feuit 
preservation  Eadlities''. 

poor  post-harvest  practice 
result  in  the  loss  of  over  3o 
per  cent  of  the  Indian  crop. 
‘'India  has  nearly  l.2m 
hectares  under  mango  crop 
but  the  productivity  of  about 


9 tonnes  a hectare  is  among 
the  lowest  In  the  world," 
said  an  official  at  the  Indian 
Chamber  of  Commerce. 

7%e  low  productivity  is 
due  to  the  majority  of  mango 
orchards  being  small  in  size 
without  irrigation  feeffitles. 
poor  genetic  stocks  and  high 
Incidence  of  pests  and 


But  only  a few  states  have 
started  addressing  the 
problems  of  poor  genetic 


stocks  awii  tmsitientlfic  farm 
practices. 

officials  say  in  spite 
of  the  bumper  crop  India's 
mango  export  in  1999  will 
not  be  "very  much  more 
than  last  year’s  25,000 
tonnes". 

India  has  done  little  to 
promote  mango  exports 
except  for  giving  freight 
siibsidy  to  exporters.  ‘Tndia 
should  emulate  Pakistan, 
which  has  a mango  board  to 


support  exports,"  said  an 
exporter.  India,  which  has 
nearly  2,000  varieties  of 
mango,  has  been  able  to 
establish  only  five  - 
alphanso,  banganpalli, 
totappuri.  chaosa  and  safeda 
in  the  world  market. 

The  principal  markets  for 
hidian  mangoes  are  the  UK, 
south-east  Asia,  the  hOddle 
East  and  Japan.  The  country 
has  only  10  per  cent  sbare  of 
world  mango  export. 


Liffe 
Yolumes 
rise  27% 
in  term 


Oil  cut  doubt 
in  Venezuela 


MARKETS  REPORT 


By  Paul  Sdroan  and 
felBan  O’Connor 


Oil  prices  weakened 
yestei^ur  amid  signs  that 
one  of  the  world’s  leading 
crude  prtmucers  would  have 
trouble  implementing  the 
output  cuts  agreed  last 
month. 

Venezuela  said  it  would  he 
unable  to  begin  reducing  its 
oil  output  immediately,  cit- 
ing social  prablems  in  the 
country. 

ifewever,  the  government 
stressed  it  was  committed  to 
the  cuts,  which  were 
endorsed  by  the  Organisa- 
tion of  Petroleum  Exporting 
Countries  last  month  and 
are  aimed  at  shaving  more 
than  2m  barrels  from  dally 
production. 

The  cuts  were  due  to  have 
begun  on  April  l. 

Brent  crude’s  benchmark 
Afay  contract  slipped  close  to 
S14.S0  a barrel  at  one  stage 
on  London’s  International 
Petroleum  Ebcchange.  In  late 
trading,  it  was  $14.66  against 
Tuesday's  close  of  $14.93. 

Sngar  futures  prices  show 
little  sUm  of  recovering  from 
their  current  lows.  ED&P 
Man  said  yesterday. 

In  its  latest  Sugar  Situa- 
tion report,  the  broker 
pointed  out  that  productioa 
In  many  countries  looked 


COMMODITIES  PRICES 


BASE  METALS 

LONDON  METAL  EXCHANGE 

(fUas  Mm  Amala»iaM  Hse  Xtatngi 
m MJMIUII,8B.7l>uniT6p0l«nei 


set  to  exceed  forecasts. 

In  addition.  Russia,  one  of 
the  world’s  main  sugar 
impenters,  was  buying  le^ 
than  last  year,  and  ship- 
ments from  BraziL  the  larg- 
est exporter,  continued  to 
grow. 

August  white  sugar  was 
down  70  cents  at  $199.40  a 
tonne  in  late  trading  yester- 
day on  the  London  Interna- 
tional Financial  Futures  and 
(^rtions  Exchange. 

Prices  of  copper  and  nickel 
both  rase  by  araund  2 per 
cent  on  the  London  Metal 
Exchange  yesterday.  The 
other  base  metals  also  fin- 
ished (he  ^ higher. 

The  main  reason  for  the 
strength  of  the  copper  price 
was  the  4.675  tonne  r^uc- 
tion  in  LME  stocks. 

Macquarie  Equities  said 
that  the  4,S0il  tonnes  of  cop- 
per withdrawn  from  ware- 
houses in  Singapore  is 
almost  certainly  headii%  for 
China.  But  it  cautiooed  that 
further  large-scale  withdraw- 
als look  unlikely  in  the  near 
future. 

FletningB  Research  argued 
that  copper  prices  are  more 
likely  to  rise  than  fall  over 
the  next  month. 

The  industry  is  hoping  for 
news  of  production  cuts 
before  the  end  of  May,  with 
Comittco’s  Highland  Valley 
mine  BHP's  US  mines, 
focus  of  attention. 


Romania  attempts  to  fulfil 
geologists’  dreams  of  gold 

The  country  is  seeking  investors  to  build  on  its  long  history  of 
mining  the  precious  metal,  writes  Gillian  O’Connor 

The  employment  prospects  which  is  cheaper  than 

The  praeMmt  of  Roman-  are  particularly  important  extraction  from  deep  mines, 
ia's  Mineral  Resources  because  the  governmmit  is 
Agency,  Mihail  lanas,  also  in  the  process  of  dosing 


he  presldmit  of  Roman- 
ia's Mineral  Resources 
Agency,  Mihail  lanas, 
keeps  a very  straight  fece. 
He  fOTward  and  hands 
over  a piece  of  paper  con- 
tainipg  detailed  figures  far 
the  country's  gold  and  silver 
production  tor  three  periods: 
the  years  prior  to  395  BC;  395 
BC  to  AD  14SS;  and  1492  to 
1998. 

The  Romanian  govern- 
ment U v^  keen  to  per^ 
suede  foreign  invescois  to 
explore  for  gold,  and  the 
agency  is  trying  to  persuade 
them  of  the  case  for  doing 
so. 

It  argues  that  the  coun- 
try's long  gold-mining  tradi- 
tioo  makes  it  likely  that 
there  are  still  substantial 
quantities  of  gold  left  in  the 
rock  and  in  old  waste  dumps 
which  can  be  recovered  by 
more  modern  minli^  meth- 
ods. It  is  auctioning  off  a 
series  of  exploration  lioenees 
carrying  substantial  tax 
concessions. 

If  its  nftmpflign  Is  success- 
ful, the  exploration  spending 
involved  should  create  jobs 
for  the  country's  laige  num- 
ber of  unemployed  as  well 
invigorate  the  local 

economy. 


down  the  lossmakdi^  state- 
owned  mines.  Romania's 
miners  represent  a powerfril 
lobby  and  closores  wiH  be 
earner  if  the  govenimeot  can 
b(9d  out  the  hope  of  alterna- 
tive employment  in  new 
tor^gn-owoed  mines. 

The  jocular  Mr  lanas 
divides  the  country’s  exist- 
ing mines  into  the  good  and 
the  bad.  Ihe  good  - produc- 
ing materials  such  as  lignite 
fa  soft,  low-grade  eoalx  salt 
and  the  kind  of  stone  u^  in 
shop  fronts  - are  those 
which  can  be  worked  effi- 
ciently and  profitably 
through  open  cast  ints  with- 
out state  sidtsidies. 

Hie  had  - producing  mate- 
rials such  as  copper,  lead, 
zinc,  gold,  silver,  and  coal 
for  power  stations  - are 
those  which  at  present  soak 
up  state  subsidies  and  are 
incapable  of  being  worked 
efiSciently  even  using  wes^ 
em  tedi^logy.  They  are  to 
be  dosed  as  rapidly  as  poli- 
tics permR. 

So  there  Is  an  urgent  need 
to  find  new  ore  bodies  which 
can  be  worked  profitably 
through  open  cast  mint'ng  - 


The  first  set  of  licences, . 
IndMriing'  15  blodCS  for  gold 
and  Silver  e^loration,  were 
auctioned  in  January. 

Mr  lanas  reels  off  the 
ymtMf  of  weD-known  ’miTiing 
ftmtipawiaa,  sudi  as  BHP  and 
Nonoandy,  iriaicb  are  said  to 
have  participated.  In  total 
the  15  companies  concerned 
are  scheduled  to  spend 
fiOOm  over  the  next  five 
years. 

The  second  auction  will 
also  include  a few  gold  and 
silver  lioenoes.  Details,  says 
Mr  fenas,  as  he  hands  across 
another  piece  of  paper,  can 
be  found  on  the  internet. 

Companies  successfully 
competing  in  the  tenders  get 
five-year  exploration 
licences,  which  can  be 
extended.  Tax  incentives 
include  freedom  from  oorpo- 
ration  tax  for  up  to  10  years, 
depending  on  the  size  of  the 
Investment,  and  the  r4dit  to 
set  capital  spending  against 
future  taxable  profits. 

In  addition  there  are  sub- 
stantial concessions  on 
import  duties  for  machingry 
to  explore  or  develop  the 
minp  - and  for  the  personal 
goods  of  the  individuals 
working  there. 


OM  geWb  dbused  mbifog  madsnery  at  Rosie  Montm 


Two  foreign  companies 
have  alrea^  started  work 
throuj^  joint  ventures  wttii 
the  moribund  state-owned 
mining  companies.  Esmer- 
alda Exploration,  an  Austra- 
lian company,  has  a Joint 
venture  with  Bemin,  the 
state  company,  to  re-process 
waste  from  the  Baia  minwR. 

Cabriel  Resources,  another 
Australian  company,  holds 
the  licence  for  one  of  the  big- 
gest goldmines,  Roeia  Mbn- 
tana,  which  is  claimed  to 
have  yielded  180  tonnes. 

But  why  should  explora- 


tion companies  choose 
Romania  rathm  than  Tanza- 
nia or  the  Andes?  Romania, 
argues  Mr  lanas.  as  he  hands 
across  a third  piece  of  paper 
showing  the  genesis  of 
d^MSSlts  of  diEterent  mlne^ 
als.  is  a geologists  dream. 

These  rai^  from  the 
terozoic  cycle  with  its 
chrome,  nickel,  manganese 
and  copper  depc^ts;  the  Her- 
cinic  cycles  with  its  iron, 
lead  and  zinc  deposits;  to  the 
Alpine  cycle  which  in  the 
Keogene  period  produced  sil- 
ver and  gold  deposits. 


By  Aatri  Sobnan 


Commodity  futures  volumes 
ou  the  London  International 
Financial  Futures  and 
Options  Exchange  rose 
37  per  cent  during  the  first 
quarter  of  this  year. 

Volumes  for  the 
exchange's  seven  commodity 
futures  products  - cocoa, 
robusta  coffee,  white  sugar, 
wheat,  barley,  potatoes  and 
freight  - jumped  to  1.4m 
contracts  between  January 
anri  Mai-ph  agalust  l.Lm  dur- 
ing the  same  period  last 
year,  Liffe  said  yesterday. 

"Overall  volumes  have 
been  by  a jump  in 

coffee,  cocoa  and  sugar  vol- 
umes, which  are  showing 
increasing  interest  despite 
low  prices,"  a Ufile  official 
said  yesterday. 

Coffee,  cocoa  and  sugar  - 
the  three  most  popular  con- 
tracts - aD  recorded  gains  of 
more  than  25  per  cent  in  the 
first  quarter,  with  coffee 
adding  31  per  cent  to  its  vol- 
umes compared  with  the 
first  quarter  of  1998. 

In  the  same  period,  prices 
dropped  to  historic  lows. 
Cocoa  fell  steadily  while  cof- 
fee and  sugar  traded  at 
around  their  lowest  for  five 
and  11  years  respectively. 

Llffe’s  potato  fotures  vol- 
umes jumped  71  per  cent, 
helped  by  flooding  across 
Biuope  this  winter  that  ham- 
pered the  potato  harvest, 
tightening  supplies  and  lift- 
ing farm  prices  to  more  than 
twice  their  1996  levels. 

Barley  fhtures  were  less 
popular,  however,  and  vol- 
umes ^ S3  per  cent  com- 
pared with  the  first  quarter 
of  last  year.  ‘"Ifre  decline  in 
barley  continues  to  reflect 
efaan^  in  the  physical  mar- 
ket such  as  barley  becoming 
less  important  tor  feed."  the 
Liffe  official  said. 

Blffex  futures  - based  on 
the  Baltic  Exchange’s  index 
of  dr?  cargo  freight  rates  - 
fell  9 per  cent 


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Precious  Metals  continued 

■ ecmaaEccooTwirqcsniorMJ 

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For  solutions  to  today’s  crossword  call  0906  843  0060. 
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imn  99.394,  13.90-1^30  (1430-1200), 
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INDICES 

■ Suton0BH(  19931  ^10» 

Apr?  Apr6  pMoago 

13308  13300  1397J 

mmo 

15543 

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Aprs  Aprs  • arnmm 

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ACROSS 

1 ISb  - second  cause  of  many 
days  off  wotk?  (6) 

4 Common  ^ across  often 
appearing  in  early  Novem- 
bor(9 

9 Promise  Mwinthing  to  fol- 
low toast  (6) 

10  2S  across’s  suit  (8) 

11  Beasts  ^wttedlau^iing 

12  Youngsters  set  out  afttf 
bar  (8) 

13  Either  way  you  loiA  at  it  - 
it's  a feilure  (3) 

14  Eeballaiinwatert6) 

17  TtanspQzt  I ca^  for  smior 
politidans  (7) 

21  Of  course  it’s  (34) 

29  One’s  worth,  say.  about  a 
thousand?  (S) 

26  Bring  a magazine  around 
agdn  for  ctmure  (44) 

27  Rsnote  flying  rock  (6) 

28  This  dancers’  gear  would 
be  good  fbr 'XSats”  - If  time 
were  pressure  (8) 

29  Dezler'is  cotqper  left  scrap 
(6) 

50  Prize  10, 3L  1 down  and  20 
ml^  comprise  one  (8) 

51  Lo^25aausses(8; 

DOWN 

1 25  across  might  make 
sweetheart  initfeHy  hap- 
pier(SI 

2 Dish  impossible  to  make 
without  eradking  (8) 


3 Overbearing  boxer,  say, 
dull  and  in  chaige  (6) 

5 With  self-possession  I sat 
Byr  artist  oitiside  (6) 

6 Around  start  of  millennltnw 
Pedro  frolic^  thus  (6) 

7 Man's  weapons  i6) 

8 Is  ^ider.  say,  without  fece? 
(6) 

12  Nick  a match  (7) 

15  Pester  and  horse  (31 

16  Sack  some  glib  editor  i3) 

18  Dull  book  I research  briefly 
inside  (8) 

19  Idiot  destroyed  roses  one 
values  (8) 

20  25  acrosses  abundant  in  Oz 
(8) 

22  British  share  vote  (6) 

23  Whm  upset,  look  to  Caper 
to  be  an  exotic  dancer  (6j 

24  Gill  plugs  healthy  meals  (6) 

25  Look  at  the  goose  (6) 

■ Solution  9,956 


iWiiiifc 


34 


AEROSPACE  &DBBKE 


t ★ 


COIBTRUiniQI  & BUUm  HATBULS  • 


LONDON  SHARE  SERVICE 

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FINANCIAL  TIMES  THURSDAY  APRIL  8 19% 


LONDON  STOCK  EXCHANGE 


Footsie  and  All-Share  indices  camp  in  the  uplands 


RSE  All-Share  index 


MARKET  REPORT 


By  Steve  Thompson, 

UK  Stock  Market  EcBlor 

London's  benchmark  index, 
the  FTSE  100.  continued  its 
march  into  new  high  ground 
yesterday,  hitting  intra*day 
and  closing  peaks  and  only 
just  failing  to  drive  through 
the  6,500  level  at  one  point. 

At  the  close  of  business, 
the  FTSE  100  was  a net  57.9 
ahead  at  6.473.2.  a two-day 
gain  of  143.2  or  2.3  per  cent. 
Also  hitting  new  records  was 
the  FTSE  All-Share  index, 
which  finished  at  a closing 
high  of  2,963.26.  after  an 


Data  lift 
for  banks 
and  shops 

COMP^^ 

By  Joel  KIbazo,  Steve 
Thompson  and  Martin  Brice 


Some  more  positive  data  on 
the  UK  economy  combined 
with  hopes  of  a cut  in  inter- 
est rates  to  drive  the  retail 
banking  sector  sharply 
ahead. 

The  latest  Chartered  Ix^- 
tute  of  Purchasing  and  Sup- 
ply service  sector  survey 
provided  a sign  that  the 
economy  Is  responding  to 
the  interest  rate  cuts  made 
by  the  Bank  of  England  over 
the  last  five  months  and  that 
some  of  tlw  gloom  that  had 
threatened  consumer  confi- 
denoe  had  started  to  dissi- 
pate. 

Althov^  the  CIPS  said  it 
was  taking  a cautious  view 
on  further  rate  cuts,  hopes  of 
such  a reduction  remained 
in  some  qimrters  of  the  mar- 
ket and  helped  lift  bankiag 
stocks. 

The  mortgage  bantrs  were 
particularly  in  demand  with 
investors  in  Abbey  National 
cheered  by  a bullish  house 
price  survey.  The  shares 
jumped  77  to  £13.36,  one  of 
the  best  performers  in  the 
FTSE  100.  Halifax,  also 
boosted  by  the  survey,  rose 
4a‘.j  to  8S0p. 

In  the  rest  of  the  sector, 
the  strong  overnight  perfor- 
mance in  Hong  Kong  helped 


intra-day  peak  of  2.971.79. 

Meanwhile,  the  FTSE  250 
Jumped  41.6  to  5,498.5.  hav- 
ing just  failed  to  penetrate 
the  S.S0Q  level,  topping  out 
at  S.499.6.  while  the  FTSE 
SmallCap  ended  at  2.411.1, 
up  4.1. 

The  start  of  the  new  tax 
year  means  that  advance 
corporation  tax  bas  been 
abolished.  As  a result,  the 
published  dividend  yield  on 
the  All-Share  has  Fallen 
sharply,  dropping  from  2.6  to 
less  than  2j3  per  oenL  The 
yield  ratio,  the  calculation 
that  compares  bond  and  divi- 
dend yields,  bas  leapt  from 
I.S  to  around  2. 


Standard  Chartered  advance 
48  to  972Vzp  while  HSBC 
hardened  102  to  £22.05. 
National  Westminster 
improved  7S  to  £1525. 

One  sector  analyst  said: 
“Lower  interest  rates  should 
ensure  that  the  current  bad 
debt  forecasts  are  a little  too 
pessimistic.”  Dealers  also 
expect  confident  stetemeuts 
from  several  sector  constitu- 
ents in  the  coming  weeks. 

The  soft  landing  theory 
triggered  a burst  of  strong 
support  for  retail  stocks,  as 
did  positive  press  comment 
and  ever-present  takeover 
hopes. 

In  the  leaders  Marks  and 
^lenoer  was  by  far  the  most 


Once  again  it  was  the 
prospect  of  interest  rale  cuts 
both  in  the  UK  and  in  the 
euro-zone,  possibly  as  early 
as  today,  was  tbe  niain 
driving  force  behind  tbe 
strong  gains  in  London's 
equity  market. 

Those  gains  looked  even 
more  impressive  during  ini- 
tial trading,  given  Wall 
Street's  rather  disappointing 
closing  performance  over- 
night when  the  Dow  Jones 
Industrial  Average  finished 
43  points  lower  having  once 
again  failed  to  hold  on  to  tbe 
10.000  level. 

The  Dow  recrossed  lOJMO 
in  early  trading  yesterday 


heavily  traded  stock  attract- 
ing turnover  of  26m. 
although  the  shares  ended 
the  session  barely  changed 
at  436=1  >p. 

Strong  support  from  SG 
Securities  and  a general 
view  that  the  stock  bas  been 
oversold  recently  saw  GU5 
move  up  27'-^  to  665p. 

Kiugflsber  gained  U'z  to 
823p  and  Nest  climbed  55  to 
807p. 

Bullish  comment  on  the 
outlook  for  furniture  and 
home  furnishings  produced 
big  gains  in  DFS,  up  16  to 
2S2‘  ip.  and  Cai^tright,  up 
27' i to  392'/sp. 

Takeover  speculation 
behind  the  jump  in  Harvey 


before  lo»i^  its  grip  on  that 
number  again. 

Dealers  and  economists 
were  mostly  confident  that 
the  Bank  of  Engiand's  mone- 
tary policy  committee  would 
deliver  another  reduction  in 
domestic  interest  rates  when 
it  announces  its  decision  at 
midday  today. 

But  some  observers  were 
not  so  convinced  of  tbe  cer- 
tainty of  a rate  cut  after  a 
batch  of  stronger-than-expec- 
ted  economic  data  was 
announced  yesterday. 

The  Chartered  Institute  of 
purchasing  and  Supply  sur- 
vey of  services  came  in  at  53 
per  cent,  its  highest  level 


since  last  September;  econo- 
mists had  bMQ  expecting  a 
figure  below  SO  per  cent. 

And  industrial  production 
rose  0.1  per  cent  in  Febru- 
ary. against  a consensus 
forecast  of  minus  0.2  per 
cent,  while  a 0.1  per  cent 
decline  In  manufactuiing 
output  was  less  than  tbe  0.3 
per  cent  consensus  forecast. 

The  strategy  and  econom- 
ics team  at  ABN-Amro  said; 
“The  improvement  in  the 
inflation  outlook  should  off- 
set any  concerns  about  tbe 
recent  jump  in  the  oil  price 
aud  give  the  monetary  policy 
committee  confidence  to 
trim  a further  25  basis 


points  off  the  repo  rate." 

Dresdner  Kleinwort  Ben- 
son also  expects  a 25  basis 
points  cut.  "Since  the  March 
mpc  meeting  the  news  flow 
has  continued  to  ar^e  for 
an  easing  of  policy."  it  said. 
Both  investment  banks  also 
expect  tbe  European  Central 
Bank  to  cut  rates  by  25  basis 
points. 

Commenting  on  the  latest 
surge.  Corey  Miller,  UK 
equity  maritet  strategist  at 
P^b^.  said:  "The  market  is 
momentum  driven;  the  insti- 
tutions are  still  pushing 
money  into  the  maritet  and 
there  is  a better  feeling 
about  earnings  estimates." 


Turnover  by  vokiiKigjKic^  - 

A: 

• W-. 


26D0i I 

FSb  • -1988 

SMK  nS6  - 


Indices  and  nfios  (Rgures  far  6/4/9a) 

FTSE  IOC 

641S.3 

+8S.3 

n» 

3B73X 

FTSE  290 

549EX 

+3A 

FISE  Noaftos  pto 

2566 

FTSE  350 

30376 

+34.7 

FTSEIODM  Pto- 

61876 

nSEAl-Son 

2938X8 

+3206 

lonaayitoo 

467 

FTSEl»«R9taU 

2X9 

260 

LM9  gBMHlIir  jM  rato 

261 

Best  pertonning  sectors 

1 TUecmmiiilcaians 

2 ReWvfs-  Gsnaa  

2 tarance — 

4 Smces  - ...... 

5 Madia 


Worst  pertomiQg  sectors 

-.44.0  1 sasDfeDiwiiin 

...+27  2 BUMnuMtfaSMeRlB 

_+24  3 Waer — 

..+20  4 UWn 

_+20  S Sapan  Pcfq  4 mnUna 


Best  and  worst  perkinning  FTSE  sectors*  (pre-reclassfflcation) 
TetecommunicdiDns  Gas  DistrSHitian 

6600 3S» 

iZ 


6Apr  Jan  1999  6Apr 

> iHGk  baSay  el  na«  FTSE  Mbs  ■■  ba  avsue  taw  ns  naan 


'H  30'^IND^' 


Up?  fya  4pr1  MarJlMar3QVrag>  Hgi  Uw 

FT  30  3a05.S  3873.3  38388  3835  38019  3824.4  400*3  27906 

1M.  0».  ytaM  2S3  2.65  169  170  2.73  166  422  172 

PIEiSdloib  23.94  23  73  2140  23.35  23.10  24.77  2541  15.80 

nEiBWiia  23SB  2367  23.33  2328  23.04  2486  25.19  1571 

FT  30  Me  csbbai  Mpi  40019  r.lVK  Be  484  KWO  fine  He  i,7% 

FT  30  tunljr  ttawgaa 

9 10  11  12  13  14  IS  16  Mob  Lear 

38732  39130  39111  39146  3899.1  39061  39080  39011  39234  38733 

C ns  tbnsted  UnM  iWft  M iMPSd  -For  i999 


STOCK  MARKET,  TRAOINSi  DAM. 


SEAQ  Mwne  97297  101707  106,789  97.705  91B79  M 

EquNv  Bnnw  (emit  8051.4  4324.9  41822  42(M.i  m 

e««y  tbijbsr  • oesTs  osset  eosei  n.^n  ma 

Sham  baM  {not  1102.1  9252  I0101S  9962 

Tow  maiM  UngblCt  - 110.790  103.470  96,842  91.466 

TOW  uiXMr  (Em0  83231  60170  6071U  5839.0 

Tew  a«as  baaed  imit  1011.0  ■ 14518  11935  13330  12872 

Twtapoaa  bmma  tsm  32.5  21.0  30.8  214  ros  94S 

TodepoM  9ks  (radKi(m)  9S  9.7  114  11.7  SO  19.4 

lar+HnWi  pd  Mnaa  bimei  eu  nMng  M knew  VC  ow  bu  B cpn  | tH  ptas 
nva-oaM  hmaa 


London  martut  data 


IXaeaagilMta' 

IS2Waakiiighsindton 

UFFE  Eipiito  Dpttoni 

Toai  Ota 

973  Toei  HtfB  m 

Total  cmratas 

39.838 

Total  fVk 

496  T«ri  Urns  27 

Ctos 

18654 

SaiK 

1.380  1 

iUs 

23.184 

tft  T *DaU  buied  tn  EquRy  Son  luted  tn  ffe  Ueam  Shve  Senn. 


Nichols,  which  closed  li  up 
at  188'.  xp. 

The  media  sector  was  thor- 
oughly depressed,  providing 
two  of  the  three  worst  per- 
formers in  the  FTSE  100  in 
Pearson  and  Reed  [ntema- 
tional. 

The  former,  still  feeling 
tbe  effects  of  the  "take  prof- 
its" recommendation  issued 
on  Tuesday  by  stockbroker 
Collins  Stewart,  fell  away  to 
finish  the  session  a net  70 
lower  at  £12B5. 

Concerns  centred  around 
Pearson's  1998  report  and 
accounts,  which  showed  a 
fall  in  profits  for  the 
Simon  & Schuster  educa- 
tional businesses  acquired 
last  November.  However,  tbe 
company  issued  a statement 
yesterday,  which  said; 
“Simon  & Schuster  made  a 
strong  start  in  the  month  of 
December  and  we  are  com- 
fortable with  the  market’s 
profit  estimates  for  1999." 

Goldman  Sachs  said  It  was 
maintaining  its  profit  esti: 
mates  and  its  "outperform- 
ance"  rating  on  Pearson. 

"The  combined  educa- 
tional businesses  of  S & S 
and  Pearson  are  now  trading 
strongly  and  the  group 
remains  on  Line  to  meet  our 


1998  Final  Dividend 


Wessanen 


KorinklQke  Wessanen  iw 

Further  to  the  statomeni  of  Febniaiy  26, 1999  (1998  reeuKs)  a 
linal  divtdend  wtt  be  proposed  to  the  Annuel  General  Meeting  of 
Shareholdeia  on  April  14. 1999  as  MVcws; 

- NLG  0.96  Uly  in  cash, 

- or,  NLG  0.68  tn  cash  end  1%  In  BDR's  chargeable  to  the 
paid-in  surplus  (Qualllylng  tor  (he  1999  dividsnd}. 

The  final  dividend  will  be  payable  as  fiom  Apifi  28. 1996. 
Exoeutive  Board 
Amatahnon.  April  8.  1999 
KoninMqke  Wee&anen  nv,  P.O.  Box  410, 

NL-1 160  AK  Amsielveen.  The  Netherlands 


THE  GOVERNMENT 

I HOUSING  BANK  OF  THAILAND  I 

I UJS.  Dollar  200,000,000  | 

I Guaranteed  Roatfaig  Rata  Notes  due  2001  ■ 

-WKN134  228-  I 

I In  acconlance  with  the  Conditicns  of  the  Notes  notice  is  heieby  | 

Igwen  that  for  the  mleresi  penod  April  06.  1999  to  October  03.  ■ 
1999  inclucted  (181  days!  the  Notes  will  bear  uKeresi  at  the  rate  ■ 
I of  5.06*%  per  annum.  The  coupon  amount  per  U.SS1.(XX]  r^ote  | 
. will  be  U.S.S2S.44,  per  U.S.S50,(X)0  Note  U S.S1272.03  and  per  * 
I U.S  5t(XI.OOO  Ncte  U.S  Sa544.08.  | 

I The  tnierest  Payment  Date  wd)  be  | 

■ October  04. 19^  * 

Deutsche  Bank  | 

March  1999  AiaiHngp«*iairtL»ii 


United  Kingdom 

U.S.$2.000.000.CX)0 
Floating  Rate  Notes  Due  2001 

In  accordance  with  the  provUions  of  the  Notes,  notice  is 
hereby  given  that,  for  the  Interest  Period  commencing  on 
land  including)  7ih  April  1999  to  (but  excluding) 
7ih  July  1999,  the  Rate  of  interest  applicaUe  to  the  Notes 
will  be  4.7S  per  cent  per  annuiiL  The  Interest  I^ymeni 
Date  for  Coupon  No.  1 1 will  be  7th  July  (999.  and  the 
Interest  Amounts  will  be  US512.0I  on  Notes  of 
USSl  JXX)  in  principal  amount  USS120.07  on  Notes  of 
USSIOlOTK)  in  priiKipal  amounL  USSI200.69  on  Notes  of 
US510U.000  in  principal  amount  and  U5$i2006.94  on 
Notes  of  US5l.000.0(X)io  principal  amounL 

Bank  of  England 

Agent  Bank 

7th  April  [999 


Uoyds  huemational  Ueptidity  SICAV 

1,  rue  SddDer,  L-2519  Lumaimiajt 
R.C.  UocnboBigN”  B 29615 

Notice  i»  beicbw  given  that  tbe  Anoual  Goaetal  Ueeiiofi  of 
Shnrefa olden  of  Uordi  Intonsiknal  Uquidity  SICAV  will  be  beU  el 
ibe  xeguiercd  ofiioe  in  Lusembexu^  1,  rue  Schiller,  on  20  April  1999 
at  lO.QO  a JiL  with  the  foQou^nb  agenda; 

1.  Siihmixxioo  of  the  repoiu  of  the  Board  of  Direct  on  and  of  Ibe 
Autborieed  Independent  AudKon 

2.  Approval  of  tbe  anmiai  acoouatx  os  at  31  October  199S  and 
alioGoUcn  cf  the  net  reuiha; 

3.  buchaigp  to  the  Amborieed  bdependem  Auditor  fee  the  financiBl 
pceiod  ended 31  OGtcbtrI996; 

4.  ElectloD  of  tbe  Aiohorieed  Independent  Auditor 

TficewatcfbonieCoopere  SkH"  for  tbe  new  }rear  in 

rcpUcemeoi  of  'Coapen  & Lybraod  S.C: 

3.  AAnc^ledgmnit  of  the  laigHCion  of  Ur  George  LO  m Director 
of  tbe  Sicav; 

Tbo  lesoliitlons  on  the  agenda  of  the  Annial  GenenJ  Meeting  wifl 
riKpBxe  no  cpMcesn  aod  will  be  poaeed  by  tbe  majority  of  tbe  votes 
czpieHcdbv  tbe  Shar^Mlden  present  or  iqiresBited  at  tbe  Meeting 

Hie  Board  of  Dlneoton 


Lloyds  International  Patifotio  SKJAV 

1,  roe  Sefaillef'.  D.2519 

R&  Lmaoaibomg  N*  B 7.635 

Notice  a hereby  gtven  that  (he  Annuel  Geoenl  Meednfi  of  Shonholden 
of  Uoydi  Intemtlenai  Portfolio  SCAV  will  be  bold  sr  the  registered 
ofiScc  a LoaonAotug.  1,  rue  BcbiHer,  ca  20  April  1999  at  11.30  tun, 
with  tbe  ibBowtaig  agenda: 

I 1.  Submisilan  of  the  repone  of  tbe  Board  of  Directon  and  of  the 
.lutbarbed  IndepeodniL  Audito*; 

2 Approval  of  tbe  .-111x11101  acoouitU  oe  at  31  October  1996  and 
oUoeatJoii  the  net  reaulle: 

3.  Dwdmtge  to  tbe  Ambanud  Independon  Anditcr  tor  the  finanCBl 
period  ooled  31  October  199S; 

4.  Election  of  the  .Atithoriaod  Independent  Auditor 

• PricewatGiboueeCoopcTs  Sbrl-  for  the  new  ^^ar  oi 

repfanement  of ’Coopeta  6c  L.ybnBtdS.C.’-, 

5.  AckncmrledgmeDt  of  tbe  wijBMriwi  of  Mr  Geeege  LO  aa  Direaor  of 
tbe  Seav; 

-fur-*-  it -*-7  flimmlfrrnrnlMfnlnc-THInvp*"* 

BO  quunuu  ood  wiB  be  pomed  by  (be  «»«wp1<-  oBjority  of  tbe  voim 
expressed  by  (be  Sheiebolden  ptceent  or  lepreaentcd  at  the 

The  Bound  of  Duvcion 


(and  consensus)  estimates  to 
the  educational  division,” 
Goldman  Sachs  said. 

Dealers  in  media  and  pub- 
listung  stocks  could  barely 
bide  their  anger  at  Tues- 
day's late  news  that  Reed 
International  had  abandoned 
talks  with  the  Gavourite  can- 
didate for  the  post  of  chief 
executive.  The  group  also 
announced  the  departure  of 
two  directors. 

"We  have  waited  for  such 
a long  time  to  have  someone 
at  tbe  helm  only  for  the 
news  to  be  ne^tive.  This  is 
a disaster."  said  one  sector 
specialist 

On  an  otberwise  firm  day 
in  the  market,  selling  of  tbk 
stock  saw  it  relinquish  14  to 
553p.  in  busy  trade  of  &£aL 
However,  late  afternoon  talk 
of  a possible  bid  for  tbe 
group  prevented  a Further 
decline  in  the  shares. 

Reed  suitor 

Michael  Savage  at  Collins 
Stewart  suggested  Dutch 
group  Wolters  Kluwer  as  a 
possible  suitor.  “Reed  Elsev- 
ier shareholders  would  now 
roll  out  the  red  carpet  to  an 
approach  from  Wolters  who 
would  then  be  Invited  to 
chance  tbelr  arm  with  the 
regulatory  autboriUes,  Busi- 
ness disposals  could  then  be 
made  from  tbe  Reed  Elsevier 
portfolio,  rather  than  that  of 
Wolters."  be  said, 

in  tbe  rest  of  the  media-re- 
lated stocks,  general  profit- 
taking  and  some  nervous 
trading  left  Carlton  Conun  □- 
nieations  13  lighter  at  614p. 


The  company  is  to  bold  a 
presentation  today  on  On- 
Digital,  the  new  digital  tele- 
vision channel  in  which  it 
holds  a SO  per  cent  stake. 

Tbe  move  by  BlCC  to  sell 
its  energy  cable  business  to 
Genera!  Cable  for  £275m  in 
cash  prompted  a surge  in  the 
stock,  which  achieved  the 
best  performance  in  the 
FTSE  250.  The  rise  of  almost 
13  per  cent  or  13  to  106p 
moved  the  shares  close  to 
the  IlOp  that  WassaD  said 
yesterday  it  had  offered. 

Wassail  said  its  ofibr  was 
conditional  on  the  BlCC 
board  accepting,  and  on  the 
cables  sale  being  dropped. 
Traders  suggested  that  the 
future  of  BlCC  now  rested  in 
the  hands  of  two  of  its  larg- 
est shareholders.  Deutsche 
Morgan  Grenfell  has  10.8  per 
cent  and  Capital  Group,  the 
US  investor,  has  7.2  per  cent. 
Those  stakes  could  combine 
with  Wassail's  9.3  per  cent  to 
form  a substantial  vote 
against  the  cables  sale. 

Traders  suggested  that 
institutional  investors, 
which  also  include  Pruden- 
tial with  5.7  per  cent  and 
M&G  wntta  3.8  per  cent, 
would  be  balancing  tbe 
effect  of  the  sale  against  the 
chance  that  Wassail  would 
walk  away. 

Howev'er,  tbe  BlCC  share 
price,  which  was  last  ni^t 
bid  at  105p.  is  now  substan- 
tially below  some  sum-of-the- 
parts  vuluations.  Investec 
Henderson  Crosthwaite  bas 
a l-lOp  valuation. 

Telecoms  remained  a busy 
trade.  Conrirmatlon  from 
Cable  and  Wireless  on  Tues- 
day that  It  was  considering  a 
pari  merger  of  Its  UK  cable 
interests  with  Telewest  Com- 
munications only  served  to 
increase  demand  for  both 
stocks.  The  former  hardened 
22  to  TST'.sp  in  trade  of  8ro. 
the  latter  appreciated 
another  23  to  SlSItp,  tbe  best 
performer  in  tbe  FTSE  100. 
Turnover  was  14m. 

CoK  Telecom  improved  60 
or  just  over  5 per  cent  to 
£12.55. 


FUTURES  AND  OPTIONS 


■ FISE 100  INPBt  HTTUSES  gJRQ  CIO  per  U Mn  point 


open 

SaMpricD 

Ooiga 

Ml 

Low 

B46QX 

65180 

+580 

65400 

6484.0 

65706 

65656 

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65780 

66286 

60236 

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66280 

66S86 

Eet  nl  OptflM. 
27BSS  198612 
500  3873 

500  201 


■ F18E  gp  IWPBt  Hnwes  (LIFFB  CIO  per  M IndW  point 

Jisi  sma  +4E0 

■ FISE  in  INDEX  OPTIIM  OJFFB  (^73 1 CIO  per  Iril  kite  poM 


63n  6350  6400  6450  SSU  6550  MOO  6888 

CPCPCPCFCFCFCPCP 
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tel  3m  112  m iswiMVi  142  zm  wt  m mm  w 202  w 238  m si 

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M 482D6»4l0  22'»3n2453S8»aR3l«2B4K283a6h223»88a 
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cat  S.1S7  M BE 

6 attosPftEnssiwsBBOFnBittuffBeiopMlwtwpiMM tpri 

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LONDON  RECENT  ISSUES;  EQUITIES 


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WK6B  XIS  66456  135157  7M58 


FTS£  Actuaries ' ShareVindYc^Jf ' ' The;'  UK  Senes  II ' TRADING-  VOLUME 


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tors  duA 

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FTSE  100  64ISJ 

PISE  250  5456.7 

FTSE  850  ei  to*  CD  S4546 

FTSE  850  3037.6 

FTSE  350  at  In  On  30466 

FISE  3SB  WMcr  TWd  28676 

FTSE  89  Umr  VtaU  31016 

PISESBHOCnp  24070 

FTSE  SaaMn  n bn  Co  23746 

FTSE  (UPOtel  29386 

FTSE  AS-Ston  «&  ta(  Gn  2SS05 

FTSE  iWolng  i3i(U> 

PISE  FM|lns  « per  CD  M19A 

FTSE  MWSmM  I963.T 

FISE  AMmI  DX  tor  Cd  1370  ti 

FISEMN  87D.Q 

■ FTSE  Actuaries  Industry  Sectors 

caiB 


+U  736563  633a02  6?P5«  609a97 

+0.1  6264  83  545363  5475  20  5547.9 

-0.1  630660  549078  552367  S58664 

+16  348775  300365  2991.17  2917.62 

+16  3497.42  301161  29963  292691 

+1.1  3314.9  2855.80  28950  2&C763 

+16  365433  3153.79  3125.40  29069 

+0.1  2763  48  2404m  239965  26359 

-ai  27259  2375.87  2)71.72  262761 

+1.1  337362  290662  2894  79  284163 

+1  1 336766  2918,41  3906  78  2849.75 

+06  150400  1304.73  130163  147164 

+06  ISI4.S8  131663  1314.53  1428  77 

+06  1564.96  136103  139.11  148761 

...  1573.07  137063  136801  150941 

+06  99560  66E.S  86664  IQ597Q 


86664  IQ597Q  166  3QiDt 


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-03  375266  327739  XMM  3)3464 
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-09  2231X3  1961.06  1981X1  2212.06 

+0.7  232168  2007.83  2010.39  2853  25 

-1  7 205096  181766  IMirT  184J06 

-26  5243.95  470003  478145  473819 

■06  2677.74  2346.46  2407  73_»7a9B 


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*0.5  2782  09  241155  2407.73  297938 


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*06  294259  2547.78  2956.72  2127X0 

-06  1992  73  1743.98  174461  222100 

-16  227022  20M.10  1984  39  358:67 

*07  13691.82  liar 46  11478  60  IU333  36 
7498.62  6532ti4  6S4569  46S782 


2666  51.10  28E466 
1966  4807  239S24 
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1680  1635  IS67X9 
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36  14  26.59  201.12 
15.70  6975  107638 
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23X7  20.9  1723AU 
1460  2732  161337 


3130  5899  2527.14 
17X2  47.14  149001 
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28.86  805  156060 
807  47.11  82404 

15  13  40  18  866  05 

S4X3  9083  433170 

16  71  19128  1914 


Mafor  Stocks  yesterday. 

vw  Ckang  DkpP 
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■ Hourly  movements 


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-36  355913  322067  318969  3823.55 

-17  3445  69  305169  3aT985  342030 


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+2  7 2167.27  1838  74  181193  >49062 

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+06  2179.11  1891.54  19D4J7  238E28 

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ina^ANClAl,  TIMES 


THURSDAY 


APRIL  8 1999 


US  INDICES 


amm  ' i3n.ni 
1SB1.«  1SS119 


U1.«  14U2 


mseCM^  . . BI£32  BMA3 


W6DU  CSV  2S6117  SSKUB 
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Dow  JoM. M.  Dhl.  YMd  1.61  1.00 

Mar  31  Mar  24  Mw  17  Year  ago 

SftPM.av.yleid  . i.n  1.13  ,7^ 

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INDEX  FUTURES 


GLOBAL  EQUITY  MARKETS 


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financial.  TIMfiS 


STOCK 


MARKETS 


Surging  Asia  takes  bull  market  by  horns 




Equity  markets  continued 
the  bulU^  run  Uiat  has  let 
many  reach  all-time  highs  or 
their  best  lor  some  time, 
terites  Philip  Coggan, 

Hong  Kong  led  the  way. 
with  the  Hang  Seng  index 
jumping  nearly  5 per  cent  to 
a 12>moath  high,  aided  by 
hopes  that  China  would  soon 
Join  the  World  Trade  Organi' 
satioD.  Korea  and  Singq>ore 
reached  t9-month  and  17- 
montb  highs  respectively. 


The  FT/S&P  Pacific  Basto 
(ex-Japan)  index  followed  up 
its  fourth'quarter  rebound 
with  a solid  54  per  cent  gain 
in  the  first  quarter  of  1999 
and  international  Investors 
seem  to  be  gradually  return' 
ing  to  the  region. 

In  Europe,  investors  con- 
tinued to  be  buoyed  by 
hopes  that  interest  rate  cuts 
might  be  sanctioned  by 
either  the  Eoropean  Geotrai 
Bank  or  the  Bank  of 
England  today. 

Further  signs  of  the  weak- 


ness of  the  CSerman  economy 
game  with  a foil  of  the  ser- 
vices index  below  50.  an  indi- 
cation that  activity  is 
shrinking.  Other  recent  data 
have  shown  slug^h  activity 
in  France  and  It^y. 

Most  bourses  closed  below 
their  best  levels  of  the  day 
but  the  Oax  in  Frankfurt 
consolidated  its  position 
above  the  5,000  levW  while 
the  CAG  40  in  Paris  gained 
0.5  per  cent.  The  continua- 
tion of  hostilities  in  Kosovo, 
despite  Yugoslavia's  cease- 


fire declaration  on  Tnesday. 
did  not  have  a big  impact  on 
the  maikets. 

On  Wall  Street,  the  Dow 
Jones  Industrial  Average 
bounced  back  above  the 
10,000  level  in  early  trading, 
before  a sell-ofi  in  technol- 
ogy stocks  caused  the  US 
market  to  lose  ground. 

Despite  the  recent  profit 
warnings  from  Coca-Cola 
and  Gillette,  1/B/E/S  Interna- 
tional, the  information  com- 
pany, notes  some  encourag- 
ing signs  in  the  run-up  to 


the  US  first-quarter  results 
season,  (hily  74  per  cent  of 
companies  that  have  made 
pre-announcements  have 
had  bad  news  for  investors, 
compared  with  84  per  cent  in 
the  fourth  quarter  of  1998. 

But  the  gap  between  the 
equity  earnings  yield  and 
the  bond  yield  has  risen  fur- 
ther - to  29  per  cent  Accord- 
ing to  I/B/E/S,  the  only 
period  hi  tiie  past  20  years 
when  the  gap  was  tUs  wide 
was  in  the  two  months  pre- 
ceding the  crash  of  1987.  The 


strategy-team  at  JISBC  have 
noticed  this  overvaluatim  In 
the  US  but  argue  that  with- 
out at  least  one  Fed  fhnds 
hike,  the  bubble  Is  not  likely 
to  burst 

*^e  forecast  the  US  mar- 
ket merely  to  tread  water 
over  the  next  year,"  they 
said.  ‘'Given  a small  rise  in 
aamlngg  and  some  Harfinn 
In  bond  yields.  tUa  scenario 
would  reduce  the  current 
overvalnation.  We  do,  how- 
ever. renmin  underweight 
US  equities." 


outside  eurb 


Weak  techs 
give  Nasdaq 
a headache 


Zurich  confounds  timid  Dow 


EUROPE 


AMERIGAS 


us  stocks  continued  to  move 
narrowly  In  early  trading. 
Volumes  stayed  heavy,  with 
teduology  shares  geoerafiy 
easier  but  with  several  higb. 
climbers  boosting  blue  chips, 
writes  John  Labate  in  htac 
York. 

'me  Dow  Jones  Industrial 
Average  was  up  16.65  at 
9,980.14  by  early  afternoon. 
The  broader  Standard  & 
Poor’s  SOO  index  was  less 
than  one  point  lower  at 
1,317.75.  Weakness  in  the 
high-tech  sector  sent  the 
Nasdaq  composite  index 
down  25.77  or  more  than  i 
per  cent  at  2,537.40.  Dedin- 
ing  shares  ou^ieced  climbers 
5 to  4 on  the  NYSE. 

Software  company  Oracle 
tumbled  more  than  8 per 
cent  to  S21H  after  the  com- 
pany announced  a new  alli- 
ance with  another  software 
concern.  Investors  skunmed 
profits  from  dher  leadms  in 
the  sector.  Including  Micro- 
soft, down  to  891^.  In 
the  internet  sector,  Ama- 
zon.com was  off  $7iV  at 

Several  notable  gainers 
helped  lift  the  Dow,  includ- 
ing Walt  Diaiey,  up  or 
more  than  6 per  cent  at 

832*. 

Alcoa  gained  nearly  4 per 
cent  to  842}^  on  positive  sen- 
timent about  its  quarterly 
earnings  release.  Financial 
stocks  were  among  the  best 
sectors  early  on,  with  Citi- 
group. a Dow  stock,  up  $314 
at 

Banking  stocks  remained 
strong,  helped  by  early  gains 
for  debt  markets.  Chase 
Manhattan  advanced  $3A  at 
$83^. 

US  Treasury  bonds  moved 
h^er  just  before  the  s£tet- 


Doon  auction  of  STbn  in  30- 
year  inOation-protected 
Issues.  The  30-year  bond  had 
gained  ^ to  96A,  yielding 
S.5U  per  cent  tn  early  after- 
noon trading. 

Disposal  speculation  got 
firmly  behind  Revlon,  which 
jump^  $3^  to  823ft  after  the 
cosmetics  leader  confirmed 
it  was  exploring  a possible 
sale  of  its  core  units. 

In  the  auto  sector,  Ford 
Motor  climbed  82ft  to  860ft 
after  the  release  of  over^ 
strong  monthly  and  quar- 
terly sales  figures. 

TORONTO  was  little 
changed  in  early  tradii^, 
although  there  was  no  short- 
age of  firm  features  among 
leading  stocks. 

Toronto-Dominion  Bank 
and  drinks  and  entertain- 
ments giant  Seagram  both 
poshed  ahead  stroo^  on  a 
variety  of  internet-related 
speculation. 

Seagram.  which 
announced  plans  to  form  an 
on-line  music  retail  venture 
with  (Sermany's  Bertels- 
mann, rose  C$3.20  to  C$85.65 
in  heavy  volumes. 

Toronto-Dominion,  Cana- 
da's fifth  biggest  bank, 
gained  C8L76  to  C877.60  after 
positive  comment  on  the 
group’s  plans  to  float  10  per 
cent  of  its  on-line  bxtdLerage 
business. 

Other  banks  were  mixed. 
Royal  Bank  of  Canada  lost 
80  cents  at  C872.20  while 
Canadian  lmp«lal  hardened 
10  cents  to  C$38.65.  Cfon^om- 
erate  Canadian  Pacific 
Unproved  35  cents  to  C$29.80. 

Golds  were  listiess.  Bar- 
rick  shed  IS  cents  at  C$2S.05 
while  Placer  Dome  ed^  ito 
5 cents  to  C$16.05. 

By  the  noon  calculation 
the  300  composite  Index  was 
off  9.11  at  6,75940. 


A powerful  run  by  the  UBS 
banking  giant  allowed 
ZURICH  to  finish  46.8  better 
at  7.216.8  on  the  SMI  index  in 
spite  of  the  uncertain  open- 
ing on  Wall  Street. 

UBS  racked  up  gains  close 
to  3 per  cent  at  one  stage  on 
rumours  ranging  firom  a bte 
property  disposal  to  a take- 
over approach  in  the  shape 
of  an  "ambitious  bid"  from 
outside  Switzerland. 

The  disposal  was  eventu- 
aily  confirmed  hut  the  other 
rumours  remained  simply 
that.  UBS  ended  SFrll 
higher  at  SFr483  in  turnover 
that  totalled  SFF498m. 

Id  drugs,  Novartis  added 
SFrl7  at  SFr2.407.  Among 
smaller  caps,  the  bi^-tecb 


Mexico  City  in  reverse 
on  low-volume  sell-off 


MEXICO  CITY  met  with 
profit-takit^  in  early  tradi^ 
that  reversed  a recent  strong 
run  for  equities  with  a 
decline  of  77.23  or  1.S  per 
cent  to  5J)69.56  on  the  IPC 
index. 

However,  selling  was 
mostly  concentrated  la  a 
handful  of  blue  chips  w^e 
volmnes  were  far  from 
heavy.  Momentum  remained 
positive  with  gainers  outpac- 
ing fallltg  stocks  by  around 
two  to  one. 


The  nSE  Eoralop  300  Imlex 
rose  9JS  or  0.77  per  cent  to 
"ifiOUD.  See  Em  Piless  page. 

sector  stood  out.  Oistefora 
jumped  SFi9.50  to  SFr88.50 
and  Kudelski  SFr435  to 
SFz6,640. 

FRANKFURT  ran  into 
profit-taking  late  in  the  day 
to  dose  with  the  Xetra  Dax 
4.98  higher  at  5.027Z5.  This 
was  36  points  ^ort  of  the 
benchmark's  high  for  the 
session. 

Retailers  were  resilient, 
helped  by  sector  consolida- 
tion stories  and  the  period  Ot 
relative  underperformauce 
that  the  sector  has  endured. 
Hopes  for  an  Interest  rate 
cut  today  from  the  European 
Central  Bank  also  boc»ted 
sentiment. 

Karstadt,  which  touched 
€353  at  one  stage,  ended 
€18.40  or  5.5  per  cent  hi^er 
at  €346.98,  while  Metro 
added  €L2S  at  €60.70. 

Deutsche  Telekom  gained 
SO  cents  to  €39.90  after  posi- 
tive comment  from  brokers. 
Siemens  was  said  to  have 
met  with  technology-driven 
buying,  Improving  €1.05  to 
€62.25. 

PARIS  rose  steadily  in  the 
morning  before  running  out 
of  steam  in  the  last  minutes 
of  the  sesaon.  Tbe  CAC-40 
closed  13.56  higher  at 
4,318.04,  a fresh  1969  record 
bat  still  off  its  life  high  of 
4,388.48,  reached  in  July  last 
year. 

Strength  in  France  Tele- 


com, the  lar^st  constituent 
in  the  CAC-40,  helped  sus- 
tain the  positive  momentum. 
Shares  closed  €1.45  higher  to 
€81.35.  Strong  March  sales 
figures  from  Carrefour,  cou- 
pled with  rumours  of  sector 
consolidation,  sent  retail 
issues  sharply  hi^r.  Carre- 
four rose  €1  to  €715,  while 
Casino  added  €A40  or  5.4  per 
cent  to  €86.50  and  Pramodes 
gained  €33.50  or  5.8  per  cent 
to  €616. 

Volatile  Bic.  the  U^ter 
and  pen  manufacturer. 
Jumped  after  SG  Securities 
added  the  stock  to  its  model 
poitfoUo.  The  share  rose  69 
cents  to  €49.19.  Accor,  which 
was  dropped  from  the  list, 
ended  4B60  lower  at  €219.60. 

Luxury-goods  group 
LVMH  wakened  on  uncer- 
tainty surrounding  its  bid 
for  Italian  fashion  house 
GucdL  Speculation  emerged 
yesterday  that  talks  between 
the  two  could  wrap  up  soon. 
LVMH  ended  €5.40  lower  but 
OS'  previous  lows  at  €227.60. 

Bank  stocks  lost  ground 
after  Socidte  G5n6rale  and 
Paribas  rejected  Rifle's  hos- 
tile bid  on  the  two  compa- 
nies. The  decision,  which 
ruled  out  a counter-oSbr  on 
BNF,  left  SocGen  €420  lower 
at  €176.20,  while  BNP  lost 
€2.70  to  €76.50. 

AMfflKRDAM  rose  8.21  to 
542.55  on  the  AEX  index, 
with  strong  gains  at  Ahold 
and  KPN  supplying  plenty  of 
motive  power. 

Retailer  Ahold  jumped 
€1.95  or  5.45  per  cent  to 
€37.70  on  news  (d  a 8170m 
takeover  in  tbe  Dutch  insti- 
tutional food  supplies  mat^ 
keL  KPN  shared  folly  in  the 
rally  for  telecoms  shares. 


Construction  leader  Grupo  Strength  in  France  Tele-  rally  for  telecoms  shares, 
Tribasa  foil  I J2  pes%  to  4.80 

pesos  after  a credit  fating  -r 

Financials  pull  back  Jo  burg 

SAG  PAULO  continued  to 

improve  following  positive  amn*a  strongest  drag  on  market 

inflation  data  2uid  amid  sentiment,  slipping  0.8  per 

signs  tlmt  foreign  investors  Johannesburg  was  buffeted  cent  u>  9,163.7.  while  indus- 
were  returning.  by  a sell-off  for  financials.  At  trials  shed  08  per  cent  to 

Inflation  for  March  slack-  the  close  of  trading  the  all-  7444.6. 
ened  to  08  per  cent  from  1.4  share  index  was  modestly  Golds  rallied.  aHriinp  1.4 
per  cent  in  February.  At  softer  at  6.404.0,  down  2.8  per  cent  to  2892.7,  helped  by 
midsession,  the  IPC  index  points.  a 3.6  per  cent  gain  to  R36.4S 

was  up  82  at  11,248.  Financials  provided  the  for  Gold  Fields. 


were  returning. 

Inflation  for  March  dack- 
ened  to  08  per  cent  from  1.4 
per  cent  in  February.  At 
midsession,  the  IPC  index 
was  up  82  at  11,248. 


trials  shed  08  per  cent  to 
7,444.6. 

Golds  rallied,  adding  1.4 
per  cent  to  2,^.7,  helped  by 
a 3.6  per  cent  gain  to  R36.4S 
for  Gold  Fields. 


Tokyo  hits  eight-month  high 


ASIA  PACIRC 


Shares  in  TOKYO  rose  to  an 
eight-month  hi^  as  the  Nik- 
kei 225  Average  clambered 
above  16,S00.  writes  Paul 
Altrafiams. 

Tbe  benchmark  gained 
74.8  to  16.554  as  foreign 
Investors  continued  to  snap 
up  stocks.  It  traded  as  high 
as  16,563  and  as  low  as 
16841-  The  other  main  indir 
ces  were  also  up  marginally. 
The  more  representative, 
wei^ted  Nikkei  300  gained 
0.16  to  26688.  Tbe  Topix 
index  of  all  first-section 
shares  gained  2 to  1824. 

'Tbe  rubber  products  sector 
was  among  the  best  perform- 
ing.  up  3.7  per  cent.  Bridge- 
stone. a favourite  with  inter- 
national investors,  gained 
Y130  or  4.6  per  cent  to 
Y3.100.  Sumitomo  Rubber, 
which  recently  concluded  an 
alliance  with  Goodyear  of 
the  US.  rose  Y35  to  Y80S. 

Among  other  stocks  popu- 
lar with  foreign  buyers. 
Toshiba,  the  electronics  con- 
glomerate that  is  in  the  prth 
rmsa  of  a radical  restructur- 
ing. continued  its  strong 
run.  up  Y31  to  YB46  in  heavy 
trading.  Hitachi  gained  Yl  to 
Y950. 

A story  in  the  Nikkei 
newspaper  that  Mitsubishi 
Motor  and.Masda  were  con- 


KMBi22SAiGCBesi:Qn8 


sidering  a broad  business 
and  technology  alliance  was 
denied  by  Mitsubishi.  Even 
so,  its  stock  gained  Y26  to 
Y4S8.  wlule  Mazda  put  on 
Y2T  to  Y472.  Sozuki.  whose 
mini-vehicles  are  selling 
well,  hit  a record  high  of 
Yl.679,  up  Y20. 

'Ihe  steel  sector  performed 
strongly,  up  2.4  per  cent. 
Kobe  Steel  gained  Y5  to 
Y102,  while  NRK  rose  Y2  to 
Y82.  Nippon  Steel  advanced 
Y5  to  Y265. 

In  Osaka,  the  OSE  index 
closed  up  141  at  17,775. 

HONG  KONG  swept  back 
Into  action  after  the  long 
Easter  break,  with  the  Hang 
Seng  index  climbing  steejdy 
In  good  fradiog  volumes. 


Ihe  benchmark  rose  54189 
or  48  per  cent  to  1181487, 
its  best  level  for  12  months. 

Turnover  for  the  session 
was  HK78bn.  up  from  last 
Thursday's  pre-holiday 
KRS8bn,  with  brokers  claim- 
ing that  fweign  funds  bad 
re-entered  the  market 
aggressively,  buying  for  the 
second  quarter. 

A range  of  blue  chips  hit 
1999  peaks,  including  HSBC, 
which  gained  HK815.00  or  &t 
per  cent  at  KKS63,  helped 
by  news  of  a US  listing  for 
the  shares.  Cheung  Kong 
gained  HE8380  at  HE86380 
and  Sun  Hung  Kai  HR380  to 
HKS6285. 

Telecoms  were  also  active. 
HE  Telecom  added  SO  cents 
at  HE816.  while  SmarTone, 
in  which  BT  of  tbe  UK  is 
taking  a 20  per  cent  stake  for 
HKSSbn,  ended  85  cents 
higher  at  RKS23.35  after 
readilDg  a session  peak  of 
HKS2480. 

WELLINGTON  touched  a 
fresh  low  for  1999  as  Inves- 
tors sold  market  heavy- 
weight NZ  Telecom  and 
showed  signs  of  reserving 
funds  for  the  forthcoming 
Contact  Energy  flotation, 
whkdi  may  soak  up  N^Ilm 
of  investment  funds  when 
the  offer  goes  ahead  next 
mooth. 

Hie  40  capital  index  foil 


30.23  or  1.4  per  cent  to 
2,10484.  NZ  Telecom  shed  12 
cents  to  NZ86.95  in  23.3m 
shares  traded.  Fletcher 
Paper  lost  3 cents  at  NZ81.13. 

BANGKOK  ended  sharply 
hi^r,  tracking  robust  gains 
in  othtf  Asian  markets.  Sus- 
tained foreign  buying  after 
the  Easter  lull  lifted  tbe  SET 
index  8.79  or  28  per  cent 
hi^er  to  35982,  just  a shade 
bedow  the  cnidal  380  mark.  ' 

Most  of  the  trading  con-  1 
centrated  on  bank  stocks, 
with  Bangkok  Bank  rising 
Btl.60  to  Bt5S.5D,  while 
Krung  Thai  Bank  added  Bti 
to  Btl8.  Siam  Commercial 
Bank  gained  BtO.SO  to 
BU8.75. 

MANILA  welcomed  lower 
March  inflation  figures  than 
expected  and  hopes  of  a fs^ 
in  interest  rates-  Tbe  com- 
posite index  settled  2681  or 
1.3  per  cent  higher  to 
2,070.17,  with  gains  spread 
across  tbe  board. 

News  that  March  inflation 
rose  by  8.7  per  cent  year  on 
year,  compared  with  a 9.9 
per  cent  increase  in  Febru- 
ary, buoyed  the  market. 
Bank  and  property  stocks 
rose  sharply  on  expectations 
oS  hmer  interest  rates. 

C&F  Homes  rose  10  centa- 
vos to  80  centavos,  whfle  Far 
East  Bank  moved  50  centa- 
vos ahead  to  55  pesos. 


adding  €285  or  8.1  per  cent 
at  €38.45. 


upwards,  lending  support  to 
the  market.  Shares  In  the 
telecoms  operator  ended 
€1.14  hteher  to  €4284,  while 
equipment  maker  Amper. 
Telefonica’s  main  client, 
added  €L1S  or  7.4  per  cent  to 
€16.68. 

HELSINKI  succumbed  to 
profit-taking,  with  losses  in 
Nokia  weighing  on  the  main 
index.  The  Hex  index  gave 
op  L24  to  6841.02,  in  a mar- 
ket lacking  direction  ahead 
of  tbe  ECB  council  meeting 
today. 

Merita  recouped  some  of 
this  yeatfo  sharp  losses,  dos- 
ing  22  cents  or  48  per  cent 
hi^ier  to  €5.14  im  rate  cut 
hopes.  Sonera,  the  mobile 


Stuffing  the  cash  under  tbe 
proverbial  «attresswotod 
have  been  a more  profitable 
option  for  investors  than 
bfrymg  into  the  l^mish  stodt 
market  this  year. 

With  Copenhagen’s  AU- 
Shaxe  index  down  4.6  per 
iwi>  since  the  start  of  the 
year  the  KFX  blue-chip 
index  off  68  per  cent.  Danish 
share  indict  have  underpsc^ 
formed  every  other  devel- 
oped matkeL 

Over  the  last  three 
months,  only  emerging  mar- 
kets him  Sri  I/inka,  Voie- 
suela  and  Hungary  have 
worse.  Some  of  Den-- 
mark’s  biggest  companies 
have  been  hardest  UL 

Telecommunications  comr 
pany  Tele  Danmark  has 
dropped  18  per  cent  since  the 
start  of  tbe  year,  pharmaceu- 
ticals nnmpany  Novo  Nor- 
itisic  lias  shed  8 per  cent  and 
brewer  Carlsberg,  under 
pressure  from  cheaper  com- 
petitors and  unfavourable 
growth  prospects,  has  plum- 
meted 25  per  cent 

Among  tbe  reasons  cited 
by  analysts  are  the  country’s 
position  ontside  the  euro- 
zone, deteriorating  economic 
growth,  a decline  in  indus- 
trial competitiveness, 
increasing  unit  labour. costs 


DMHMlk 

ttFXUm. 


months  than  tbey^  have,  ben 
sSaaoB  the  depths  cS  toe’hiS' 
recession  In  1993. 

Faced  witii  such  an  ogl 
look  - weakening  indnsttkl- 
earnings  and  the  canaequebf  . 
possibility  of  lower  -divt  * 
den&  - small  maOer  ovw-^1 
seas  investors  are  hypea^.-' 
the  Danish  stock,  maikk:":  ; 

In  teems  ofmatketca^til- 
Isation,  the  cgn^wd  vaiwl 
of  shares  quoted  on  the' 


Elsevier  fell  on  manage-  iplume'tgien^,  ai^ 


meat  uncertainty.  Two 
senior  directors  resigned  on 
Tuesday  amid  news  that  the 
group  was  still  seardiing  for 
a nhiaf  executive.  Its  shares 
lost  35  cents  to  €13A5  for  a 
two-day  decline  (tf  Ai  per 
cent.  VNU  was  also  a dull 
market,  slipping  €1.05  to 
€3580. 

Gucci,  at  a peak  of  €7880 
tote  last  month  as  hopes  of 
an  LVMH  takeover  rose,  foil 
back  on  profit-taking,  dip- 
ping €2  to  €73.10. 

MADRID  closed  Uttle 
changed,  as  the  market 
sobered  up  following  Tues- 
day’s last-minute  rally 
driven  by  Yugoslavia's 
ceasefire  ofibr.  The  general 
index  settled  1.46  higher  to 
68989. 

Telefonica  followed  other 
European  telecom  stocks 


the  trendi 


€16.90  on  renewed  interest 
from  foreign  investors. 
Mobile  phone  giant  Nokia,  in 
contrast,  rtoxeated  85  cents 
to€15L40. 

MILAN  closed  virtually 
unchanged  as  renewed  wor- 
lies  ehrat  Kosovo  wiped  out 
earlier  gains.  The  sdl-share 
Mibtel  index  settled  64 
higher  to  25J.TC  in  subdued 
tzading. 

Olivetti  remained  in  focus 
after  shareholdms  approved 
a capital  increase  to  finance 
its  $65bn  bid  for  Telecom 
Italia.  Shares  in  the  com- 
pany rose  4 cents  to  €280. 
while  Telecom  Italia  con- 
ceded 10  cents  to  €982. 

MfllM  and  edM  iv  Jeflray 
Brawn,  Bertrand  Benoit,  Pan! 
Bregan  and  Juliin  Snmoiers 


to,'.  llaUlA 


•The  Danish  eoonmny  has 
had  six  years  of  vexs^ilA.. 
growth,  but  ezpectadikW'M 
to  Industrial  pecfo^nan^ 
are  now  veiy  low  a^  ocSt- 


ntry’s  has  declined  from  DKtinflKi . 
euro-  at  toe  start  of  this  . . to' 
wofpifl  DKr774bn.  Yeeterday.:  tlw. 
Indus-  KFK  index  closed  at  SOGLT^' 
mess,  down  68  per  cent  since  iiti  . 
.costs  start  of  the  year. 

By  cootoertamL  stoA  tear-. . 
j"  ^ -,^kets  in  the  three  tAra* Bom 


pean  Union  countries  ont- 
side tbe  single  curreiu^ 
have  an  gaftiwi  Mnce  Jana-, 
ary  I.  Sweden’s  Geii«€i. 
into  is  up  9 per  cent  (to 


sumer  sentihmnt  ih  FTSE  100  in  London  has.: 
weak,”  says  Eeld  Hoha,^4fiiigtd  f advanced  9.1  pa  cent  and  tii 
of  research  at  BG  Bmak  in  Greece,  the  Atoehs  inder ' 
Copenhagen.  In  this  cnviraii-  has  sur^  21  per  ooxt. 
m^  it  is  difficult  for  com-  Whether  or  not  tbe  dedBpe 
panies  to  earn  moni^  and  tn  Qie  Danish  stodi  umfla* 
BG  Bank  eqiects  tte  Danish  has  bottomed  out  depends 
eoonomy  to  grow  oi^  0.5  on  performance  elsevdiete  to' 
per  cent  or  less  this  year.  Buntpe. 

According  to  a survey  last  Should  Europe  suffe"  r 
week  from  Greens  Analy^  correction,  Denmark  wOl  foU 
setnstitat,  earnings  in  73  per  low  suit,  but  is  unlikely  far 
cent  of  the  country’s  biggest  foil  as  hard  as  tiie  rest.  And 
companies  either  dropped  or  should  European  share  , 
marked  time  during  toe  first  . prices  track  upwards 
quarter.  mark  could  be  ripe  for  faff- 

Company  bosses  are  more  gam-hunting, 
pessimistic  about  business 

prospects  in  the  next  six  Clare  MacCaiUrf. 


This  anrKruTKmment  appeaia  as  a iTiatter  of  rectod  only 

oamm 

ALPHA  TELECOM 

ALPHA  TELECOM 

£9.5  million 
Development  Funding 

Arranged  and  Provided  by: 

Royal  Bank  Development  Capital 

Advised  by: 

Investec  Henderson  Crosthwaite 


jfK  Royal  Bank 
Develoome 


Development  Capital 


RaguWetfbrHMRO 


INVESTED 

Henderson 

Crosthwaite 

Corporate  Finance 


hwPt^HapatMnermwiieiiihi  »rt>Wnnn( 
nwaac  Bm  (UK)  iMiad.  b ragddMl  by